Relationship Between Macroeconomic instability and current account in WAEMU countries

Mounoufie Valery Koffi, Moro Jean-Pierre Eby and Dago Okoubi Arthur Yao

Bulletin of Applied Economics, 2025, vol. 12, issue 2, 165-174

Abstract: In this study, we analyze the link between macroeconomic instability and the current account balance within the WAEMU zone. We use World Bank data from 1990 to 2022 and apply an econometric approach based on VAR modeling. The results indicate that the current account balance reacts negatively to macroeconomic instability shocks, but positively to supply shocks (GDP growth rate). The causality test reveals a bidirectional relationship between macroeconomic instability and the current account balance. These results highlight the need for macroeconomic stabilization policies and institutional reforms to strengthen economic resilience in the WAEMU zone. Policymakers should prioritize strategies that simultaneously promote stability and growth, thereby improving the domestic economy and external position of member countries.

Keywords: Macroeconomic instability; current account balance; Panel VAR. (search for similar items in EconPapers)
JEL-codes: C33 F14 F41 F62 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:rmk:rmkbae:v:12:y:2025:i:2:p:165-174

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