Consumption-Based Interest Rate and the Present-Value Model of the Current Account—Evidence from Nigeria

Olumuyiwa Adedeji

No 2001/093, IMF Working Papers from International Monetary Fund

Abstract: This paper presents a model of current account determination, based upon the permanent-income hypothesis. A present-value relationship among the current account, changes in net output, the exchange rate and the terms of trade is derived and the implications of such a relationship are tested using data for Nigeria during 1960-97. This paper presents a model of current account determination, based upon the permanent-income hypothesis. A present-value relationship among the current account, changes in net output, the exchange rate and the terms of trade is derived and the implications of such a relationship are tested using data for Nigeria during 1960-97.

Keywords: WP; interest rate; Present-value model; consumption-based interest rate; Nigeria; optimal current account; world interest rate; utility function; terms of trade change; consumption expenditure; current account determination; model of the current account; unintended terms of trade shock; Current account; Consumption; Terms of trade; Current account balance; Real interest rates; Global (search for similar items in EconPapers)
Pages: 29
Date: 2001-08-01
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Citations: View citations in EconPapers (7)

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