{
  "title": "Consumption-Based Interest Rate and the Present-Value Model of the Current Account—Evidence from Nigeria",
  "publication": "IMF Working Papers, August 1, 2001",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/consumption-based-interest-rate-and-the-present-value-model-of-the-current-account-evidence-15171",
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  "summary": "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 da",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Author: Olumuyiwa S Adedeji\n- Publication date: August 1, 2001\n- Paper type: IMF Working Paper (Working Paper No. 2001/093)\n- Core objective: Present a model of current account determination based on the permanent-income hypothesis and derive a present-value relationship among the current account, changes in net output, the exchange rate, and the terms of trade; test implications using data for Nigeria during 1960-97.\n- Sample period used for empirical testing: 1960-97\n- Pages: 29"
    },
    {
      "heading": "Model and Methodology",
      "content": "- Theoretical basis: Permanent-income hypothesis.\n- Derived relationship: A present-value relationship linking the current account, changes in net output, the exchange rate, and the terms of trade.\n- Key theoretical construct: Consumption-based interest rate incorporated into present-value model of the current account.\n- Empirical approach: Testing the implications of the derived present-value relationship using Nigerian data for 1960-97."
    },
    {
      "heading": "Empirical Evidence (Nigeria, 1960-97)",
      "content": "- Data tested: Current account, changes in net output, exchange rate, terms of trade for Nigeria.\n- Purpose of tests: Validate the implications of the present-value relationship derived from the permanent-income hypothesis when a consumption-based interest rate is used."
    },
    {
      "heading": "Key Findings",
      "content": "- The paper derives a present-value relationship among the current account, changes in net output, the exchange rate, and the terms of trade.\n- The implications of this present-value relationship are empirically tested using Nigerian data spanning 1960-97."
    },
    {
      "heading": "Policy Implications and Relevance",
      "content": "- The model informs understanding of current account determination through a consumption-based interest rate framework grounded in the permanent-income hypothesis.\n- Relevance to policy discussions on balance of payments and current account dynamics for Nigeria, considering exchange rate and terms-of-trade effects.\n\n---\n\n Content in this bundle\n\n- wp0193\n  - wp0193 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp0193 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/consumption-based-interest-rate-and-the-present-value-model-of-the-current-account-evidence-15171"
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    "Authors: Olumuyiwa S Adedeji",
    "Published: August 1, 2001",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451851656.001",
    "Author: Olumuyiwa S Adedeji",
    "Publication date: August 1, 2001",
    "Paper type: IMF Working Paper (Working Paper No. 2001/093)",
    "Core objective: Present a model of current account determination based on the permanent-income hypothesis and derive a present-value relationship among the current account, changes in net output, the exchange rate, and the terms of trade; test implications using data for Nigeria during 1960-97.",
    "Sample period used for empirical testing: 1960-97",
    "Pages: 29",
    "Theoretical basis: Permanent-income hypothesis.",
    "Derived relationship: A present-value relationship linking the current account, changes in net output, the exchange rate, and the terms of trade.",
    "Key theoretical construct: Consumption-based interest rate incorporated into present-value model of the current account.",
    "Empirical approach: Testing the implications of the derived present-value relationship using Nigerian data for 1960-97.",
    "Data tested: Current account, changes in net output, exchange rate, terms of trade for Nigeria.",
    "Purpose of tests: Validate the implications of the present-value relationship derived from the permanent-income hypothesis when a consumption-based interest rate is used.",
    "The paper derives a present-value relationship among the current account, changes in net output, the exchange rate, and the terms of trade.",
    "The implications of this present-value relationship are empirically tested using Nigerian data spanning 1960-97.",
    "The model informs understanding of current account determination through a consumption-based interest rate framework grounded in the permanent-income hypothesis.",
    "Relevance to policy discussions on balance of payments and current account dynamics for Nigeria, considering exchange rate and terms-of-trade effects.",
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