Are the Trade Deficits of Less Developed Countries Stationary?. Evidence for African Countries
AbstractThis study tests for the stationarity of current account deficits for a sample of twenty six African countries. For this purpose, a new test advocated by Breuer, McNown and Wallace (2002) is employed which allows one to test for unit roots in heterogeneous panel datasets. This SURADF test involves estimating ADF regressions within a seemingly unrelated regression framework. While the benefits from creating a panel to overcome low test power are well known, this particular test also offers key advantages over existing alternative panel data unit root tests. Unlike previous tests, we are able to identify which members from within the panel are responsible for rejecting the null hypothesis of joint non-stationarity. In addition to this, the SURADF test does not presume disturbances that are independently and identically distributed. Using annual data covering the period 1960-2000, this study finds strong evidence in favor of current account mean-reversion for twenty one African countries.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Euro-American Association of Economic Development in its journal Applied Econometrics and International Development.
Volume (Year): 3 (2003)
Issue (Month): 3 ()
Contact details of provider:
Web page: http://www.usc.es/economet/eaa.htm
Find related papers by JEL classification:
- F3 - International Economics - - International Finance
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- O0 - Economic Development, Technological Change, and Growth - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Wickens, M. R. & Uctum, Merih, 1993. "The sustainability of current account deficits : A test of the US intertemporal budget constraint," Journal of Economic Dynamics and Control, Elsevier, vol. 17(3), pages 423-441, May.
- Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002.
"Unit root tests in panel data: asymptotic and finite-sample properties,"
Journal of Econometrics,
Elsevier, vol. 108(1), pages 1-24, May.
- Tom Doan, . "LEVINLIN: RATS procedure to perform Levin-Lin-Chu test for unit roots in panel data," Statistical Software Components RTS00242, Boston College Department of Economics.
- Coakley, Jerry & Hasan, Farida & Smith, Ron, 1999.
"Saving, Investment, and Capital Mobility in LDCs,"
Review of International Economics,
Wiley Blackwell, vol. 7(4), pages 632-40, November.
- Lucio Sarno & Mark P. Taylor, .
"Real Exchange Rates under the Recent Float: Unequivocal Evidence of Mean Reversion,"
Economics and Finance Discussion Papers
97-14, Economics and Finance Section, School of Social Sciences, Brunel University.
- Sarno, Lucio & Taylor, Mark P., 1998. "Real exchange rates under the recent float: unequivocal evidence of mean reversion," Economics Letters, Elsevier, vol. 60(2), pages 131-137, August.
- Bharat Trehan & Carl E. Walsh, 1988.
"Testing intertemporal budget constraints: theory and applications to U. S. federal budget and current account deficits,"
Working Papers in Applied Economic Theory
88-03, Federal Reserve Bank of San Francisco.
- Trehan, Bharat & Walsh, Carl E, 1991. "Testing Intertemporal Budget Constraints: Theory and Applications to U.S. Federal Budget and Current Account Deficits," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 206-23, May.
- Pattichis, Charalambos & kanaan, Mona, 2001. "Is Lebanon’s Trade Deficit Sustainable? A Cointegration Analysis," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 54(1), pages 49-56.
- Coakley, Jerry & Kulasi, Farida, 1997. "Cointegration of long span saving and investment," Economics Letters, Elsevier, vol. 54(1), pages 1-6, January.
- Gundlach, Erich & Sinn, Stefan, 1991. "Unit root tests of the current account balance: implications for international capital mobility," Kiel Working Papers 495, Kiel Institute for the World Economy.
- O'Connell, Paul G. J., 1998. "The overvaluation of purchasing power parity," Journal of International Economics, Elsevier, vol. 44(1), pages 1-19, February.
- Papell, David H., 1997. "Searching for stationarity: Purchasing power parity under the current float," Journal of International Economics, Elsevier, vol. 43(3-4), pages 313-332, November.
- AKA, Bédia F., 2009. "Business Cycle And Sectoral Fluctuations: A Nonlinear Model For Côte D’Ivoire," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 9(1), pages 111-126.
- repec:ltr:wpaper:2004.02 is not listed on IDEAS
- Aka, B.F., 2004. "Do WAEMU Countries Exhibit a Regional Business Cycle?. A Simulated Markov Switching Model for a Western Africa area," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 4(4).
- Chu, Hsiao-Ping & Chang, Tsangyao & Chang, Hsu-Ling & Su, Chi-Wei & Yuan, Young, 2007. "Mean reversion in the current account of forty-eight african countries: Evidence from the Panel SURADF test," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 384(2), pages 485-492.
- László Kónya, 2004.
"Saving and Growth: Granger Causality Analysis with Bootstrapping on Panels of Countries,"
2004.02, School of Economics, La Trobe University.
- Issiaka Coulibaly & Blaise Gnimassoun, 2013. "Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?," EconomiX Working Papers 2013-42, University of Paris West - Nanterre la Défense, EconomiX.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (M. Carmen Guisan).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.