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Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?

Issiaka Coulibaly () and Blaise Gnimassoun ()

No 2013-42, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This paper aims at studying the sustainability of current accounts in Sub-Saharan Africa and determining whether this sustainability depends on the exchange rate regime. Relying on a formal theoretical framework and recent panel cointegration techniques, our findings show that current accounts have been globally sustainable in Sub-Saharan Africa countries over the 1980-2011 period. However, this sustainability has been lower for countries operating a fixed exchange rate regime or belonging to a monetary union. We also find that the difference in the level of sustainability could be explained by a higher persistence in the current account adjustment of countries operating under rigid exchange rate regimes.

Keywords: Current account; Exchange rate regime; Panel cointegration tests; Sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: F31 F33 C33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-mon and nep-opm
Date: 2013
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Journal Article: Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter? (2014) Downloads
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