Are African Current Account Deficits Different? Stylized Facts, Transitory Shocks, and Decomposition Analysis

Author/Editor: Zanforlin, L. ; Chong, Alberto ; Calderón, César
Publication Date: January 01, 2001
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: This paper analyzes the behavior of current account deficits in Africa and estimates whether the deficits are excessive with respect to fundamentals. The findings are the deficits are (i) not very persistent; (ii) positively linked with domestic growth; (iii) strongly linked with public (and private) savings, suggesting that fiscal consolidation in IMF-supported programs may be relatively effective; (iv) linked with aid flows, so as to close the external gap, and (v) linked with currency depreciation and the terms of trade. The deficit is "excessive," as it is almost 3 percent of the gross national disposable income above the equilibrium level.
Series: Working Paper No. 01/4
Subject(s): Current account deficits | Africa | Economic models | China, People's Republic of

Author's Keyword(s): Current account | Dynamic panel data models | decomposition analysis
Publication Date: January 01, 2001
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA0042001 Pages: 40
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