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

Author

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  • Ms. Luisa Zanforlin
  • Mr. César Calderón
  • Mr. Alberto Chong

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.

Suggested Citation

  • Ms. Luisa Zanforlin & Mr. César Calderón & Mr. Alberto Chong, 2001. "Are African Current Account Deficits Different? Stylized Facts, Transitory Shocks, and Decomposition Analysis," IMF Working Papers 2001/004, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2001/004
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    2. Abdur R. Chowdhury, 2003. "Do asymmetric terms of trade shocks affect private savings in a transition economy?," Macroeconomics 0303006, University Library of Munich, Germany.
    3. Abdur R Chowdhury, 2004. "Private Savings in Transition Economies: Are there Terms of Trade Shocks?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(4), pages 487-514, December.
    4. repec:zbw:bofitp:2003_003 is not listed on IDEAS
    5. Herrmann, Sabine & Winkler, Adalbert, 2009. "Real convergence, financial markets, and the current account - Emerging Europe versus emerging Asia," The North American Journal of Economics and Finance, Elsevier, vol. 20(2), pages 100-123, August.
    6. Chowdhury, Abdur R., 2003. "Do asymmetric terms of trade shocks affect private savings in a transition economy?," BOFIT Discussion Papers 3/2003, Bank of Finland, Institute for Economies in Transition.
    7. Kelvin Onwuka & Anayochukwu Basil Chukwu & Tobechi Faith Agbanike, 2021. "Current account and financial reforms: Evidence from sub‐Saharan Africa," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4303-4314, July.

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