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

40 Pages Posted: 30 Jan 2006

See all articles by César A. Calderón

César A. Calderón

Central Bank of Chile

Alberto Chong

University of Ottawa

Luisa Zanforlin

International Monetary Fund (IMF) - European Department; World Bank

Date Written: January 2001

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 that 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: Current Account, Dynamic Panel Data Models, Decomposition Analysis

JEL Classification: F30, F32, F40

Suggested Citation

Calderon, Cesar A. and Chong, Alberto and Zanforlin, Luisa, Are African Current Account Deficits Different? Stylized Facts, Transitory Shocks, and Decomposition Analysis (January 2001). IMF Working Paper No. 01/4, Available at SSRN: https://ssrn.com/abstract=879311

Cesar A. Calderon (Contact Author)

Central Bank of Chile ( email )

Agustinas 1180
Santiago
Chile

Alberto Chong

University of Ottawa ( email )

2292 Edwin Crescent
Ottawa, Ontario K2C 1H7
Canada

Luisa Zanforlin

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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