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

Luisa Zanforlin, César Calderón and Alberto Chong

No 2001/004, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: WP; current account deficit; current account effect; current account behavior; current account reversal; current account determination; Current Account; Dynamic Panel Data Models; Decomposition Analysis; country sample; long-run current account deficit; current account adjustment; rate of growth; behavior of the current account deficit; such current account deficit; current account sustainability; Cent. Afr. rep; current account fluctuation; Current account deficits; Private savings; Terms of trade; Current account balance; Africa; Sub-Saharan Africa; North Africa (search for similar items in EconPapers)
Pages: 40
Date: 2001-01-01
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Citations: View citations in EconPapers (7)

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