Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?

Gnimassoun, Blaise; Coulibaly, Issiaka

doi:10.1016/j.econmod.2014.04.017

Cited by 34 publications

(34 citation statements)

References 82 publications

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“…The existing literature has said little about this role of remittances and has instead contributed more on the role of the exchange rate regime. While Gnimassoun and Coulibaly () and earlier work conclude that a floating exchange rate helps facilitate current account adjustment or reversion, Chinn and Wei () find that there is no such role. In this paper, we instead propose to provide an additional new insight into what might actually drive sustainability.…”

Section: Introductionmentioning

confidence: 92%

Do Remittances Facilitate a Sustainable Current Account?

Hassan

Holmes

2015

World Economy

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1 Although the World Bank points out these costs remain high, especially in Africa and in small nations. Globally, migrants pay an average cost of 9 per cent to send money home. 2 For example, deposits by the non-residents in India attract higher interest rates and are exempt from income tax. Similarly, Pakistan and Bangladesh give incentives to increase remittances. In 2008, India's remittance receipts were the highest at US$52 billion. Other countries with high remittances include China and Mexico.

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Section: Introductionmentioning

confidence: 92%

Do Remittances Facilitate a Sustainable Current Account?

Hassan

Holmes

2015

World Economy

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“…Testing the relationship between current account and exchange rate in developing and developed countries, Fernando () found a strong and positive link between current account and fixed exchange rate arrangement in non‐industrial countries. Similarly, Gnimassoun and Coulibaly () discovered that flexible real exchange rate and current account sustainability are positively correlated, which implies that exchange rate basically influences the level of current account sustainability in sub‐Saharan African countries. So also, Gnimassoun () identified a robust relationship between current account external imbalances and exchange rate regimes in sub‐Saharan African countries, while Gervais et al .…”

Section: Literature Reviewmentioning

confidence: 94%

“…Similarly, Gnimassoun and Coulibaly (2014) discovered that flexible real exchange rate and current account sustainability are positively correlated, which implies that exchange rate basically influences the level of current account sustainability in sub-Saharan African countries. So also, Gnimassoun (2014) identified a robust relationship between current account external imbalances and exchange rate regimes in sub-Saharan African countries, while Gervais et al (2015) noticed a negative nexus between real exchange rate and current account in the long run.…”

Section: Literature Reviewmentioning

confidence: 95%

Oil price, trade openness, current account balances and the official exchange rate in Nigeria

et al. 2019

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Since a larger percentage of government revenue are generated from crude oil trade, the fluctuations in the price of oil have always been influencing the budget financing in Nigeria. Also, investment decisions and trade cost are been influenced by the status of the oil price. The study investigates the relationship between oil price, trade openness, current account balances and official exchange rate in Nigeria using secondary data from 1980 through 2016. The non‐linear auto‐regressive distributed lag (NARDL) was used to analyse the short‐run and long‐run link between the variables. From the findings, it was established that in the short run and long run, trade openness negatively impacts on the official exchange rate of naira to dollar in Nigeria. The consumer price index positively and significantly influences exchange rate value in Nigeria in the short run and long run. Positive changes in oil price impacted negatively on official exchange rate in the short run, but in the long run had a positive impact. Negative changes in the price of oil have a positive insignificant and negative significant impact on official exchange rate in the short run and long run, respectively. The error correction result verified that the variables (trade openness, current account, oil price and consumer price index) correct 91 per cent deviations of exchange rate from short‐run equilibrium back to equilibrium in the long run. The study concludes that trade policy in Nigeria is not in favourable direction of official exchange rate in Nigeria. Also, positive changes in oil price and current account balances are strong determinants of the Nigerian official exchange rate of naira to dollar in the long run. Therefore, it is recommended that trade policies should be reviewed in Nigeria towards enhancing other sectors that would add more value to naira.

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“…1 See, for example, Chortareas, Kapetanios, and Uctum, (2004), Raybaudi, Sola, and Spagnolo (2004), Holmes and Panagiotidis (2009), Kim, Min, and McDonald (2009), Christopoulos and León-Ledesma (2010), Takeuchi (2010), Chen (2011a,b), Cuestas (2013), Gnimassoun and Coulibaly (2014) and Cecen and Xiao (2014).…”

Section: Introductionmentioning

confidence: 99%