Current Account Sustainability of ECOWAS Countries

Yaya Sissoko () and Niloufer Sohrabji

The African Finance Journal, 2012, vol. 14, issue 2, 1-22

Abstract: This paper examines current account sustainability of eight countries in the Economic Community of Western African States (ECOWAS); Burkina Faso, Côte d'Ivoire, Ghana, Mali, Niger, Nigeria, Sénégal and Togo. The paper uses the intertemporal solvency framework of Hakkio and Rush (1991) and Husted (1992) and cointegration methodology to test for a long run relation between exports and imports items of the current account. Further, we estimate this long-run relationship using dynamic OLS. Our results show that only Sénégal and Togo have sustainable current account positions. Of the others, Ghana and Niger have a statistically significant relation between exports and imports although it is not strong enough, and thus they continue to have vulnerable current account positions. The rest of the countries have unsustainable current account deficits. The paper argues that monetary, trade and political reforms are necessary to reduce vulnerabilities in external positions.

Keywords: Current Account; Intertemporal solvency; Sustainability; ECOWAS (search for similar items in EconPapers)
JEL-codes: C22 F32 F41 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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