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Sustainability of current account balances in MENA countries: threshold cointegration approach

Author

Listed:
  • Rihab Bousnina

    (University of Sfax)

  • Srdjan Redzepagic

    (University of Nice Sophia Antipolis)

  • Foued Badr Gabsi

    (University of Sfax)

Abstract

This document aims to determine the empirical link between current account balances and a set of economic variables proposed by the theoretical and empirical literature. To do this, we first use a generalized method of moments (GMM) dynamic panel regression technique to identify the key fundamentals of current account balances in certain economies in the Middle East and North Africa (MENA) region. Next, we estimate the link between exports and imports in order to test the sustainability of current account balances. To do this, the authors estimate a threshold cointegration model on a sample of 12 countries from the MENA region over the period 1970–2018. Nevertheless, the results show that the countries of the MENA region must put in place policies aimed at reducing their current account deficits in order to regain their external stability.

Suggested Citation

  • Rihab Bousnina & Srdjan Redzepagic & Foued Badr Gabsi, 2021. "Sustainability of current account balances in MENA countries: threshold cointegration approach," Economic Change and Restructuring, Springer, vol. 54(1), pages 241-264, February.
    • Handle: RePEc:kap:ecopln:v:54:y:2021:i:1:d:10.1007_s10644-020-09278-5
    DOI: 10.1007/s10644-020-09278-5
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    More about this item

    Keywords

    Current account; Threshold autoregressive; Budget constraint;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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