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Determinants of the Current Account Balance in Nigeria, Ghana and Cote d’Ivoire

Sebil Olalekan Oshota () and Adegoke Adeleke ()
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Sebil Olalekan Oshota: Southwestern University

Acta Universitatis Danubius. OEconomica, 2015, issue 11(3), 127-145

Abstract: This study analyzed the relationship between the current account balance of the balance of payment and its determinants for the periods 1978 to 2008 in Nigeria, Ghana and Cote d’ Ivoire. The analysis was based on the saving-investment theory and also in line with the intertemporal approach. Using a linear Vector Autoregressive (VAR) approach, our results show that all the variables, except the relative income (RELY), real effective exchange rate (REER) and domestic investment (INV) for Nigeria, Ghana and Cote’d’Ivoire respectively are important in explaining the long run relationship. However, there was no evidence of short run relationship between the variables and the current account balance in all the three countries. The presence of long run co-movements between the current account balance and its determinants found in this study implies the effectiveness of targeting one of the variables in influencing the long run behaviour of the other variables. The current account imbalance observed in our selected countries was unavoidable and reflected the complexity of the economic problems the countries faced during these years.

Keywords: balance of payments; relative income; reel effective exchange rate; domestic investment (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:dug:actaec:y:2015:i:3:p:127-145