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Current Account Im(balances) and Adjustments to Targets for Regional Integration in West Africa: One Step Forward, Two Steps Backwards

  • Chuku ChukuEmail author
  • Johnson Atan
  • Felix Obioesio
  • Kenneth Onye
Chapter
Part of the Advances in African Economic, Social and Political Development book series (AAESPD)

Abstract

In this paper, we seek to answer three main questions: first, what are the long- and short-run determinants of current account balances in West Africa; second, is there a sustainable path for the current account position that is consistent with regional integration; and if yes, what has been the process of adjustment towards such a path. We address these questions by first identifying the long-term determinants of the current account, and then using the results to calculate the equilibrium sustainable targets for the current account in the region. After accounting for short-run disequilibrium adjustment processes, we show how far apart each country is from the regionally sustainable path. The key findings are as follows: the determinants of current account dynamics differ depending on the time horizon; the real exchange rate, fiscal policy, trade openness, investment, and income levels are the key determinants in the short run; there is considerable variation in the deviation of each countries’ current account position from the regionally sustainable equilibrium path. Some implications for policy are highlighted.

Keywords

Current account dynamics Panel cointegration Regional integration West Africa 

JEL Classification

F32 F41 C33 

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Chuku Chuku
    • 1
    • 2
    Email author
  • Johnson Atan
    • 1
  • Felix Obioesio
    • 1
  • Kenneth Onye
    • 1
  1. 1.Department of EconomicsUniversity of UyoUyoNigeria
  2. 2.Macroeconomic Policy, Forecasting and Research DepartmentAfrican Development BankAbidjanIvory Coast

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