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On the Sustainability of Current Account Deficits in Cameroon

Author

Listed:
  • Edouard T. Djeutem

    (Department of Economics, Simon Fraser University, Canada)

  • Pierre E. Nguimkeu

    (Andrew Young School of Policy Studies, Georgia State University,USA)

Abstract

Two approaches are used to analyze the sustainability of the current account deficits of Cameroon in order to find out whether current economic policies are sound enough to guarantee the country' s financial solvency. The first uses a structural procedure to compare current account deficits relative to an optimal benchmark using the Campbell-Shiller's methodology. The second uses a reduced form approach to test for intertemporal budget constraint through cointegration tests between imports and exports plus net transfer payments on foreign obligations. Our results suggest that the current account imbalances for Cameroon based on data from the period 1970-2002 are excessive and the deficits are currently unsustainable

Suggested Citation

  • Edouard T. Djeutem & Pierre E. Nguimkeu, 2013. "On the Sustainability of Current Account Deficits in Cameroon," International Journal of Economics and Financial Issues, Econjournals, vol. 3(2), pages 486-495.
    • Handle: RePEc:eco:journ1:2013-02-20
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    Citations

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    Cited by:

    1. Z beyir Turan & Ayberk Nuri Berkman & Asl han Nakibo lu, 2016. "Sustainability of Current Account Deficit in Turkey (1989-2014)," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 807-812.

    More about this item

    Keywords

    : Current account; Sustainability; Intertemporal budget constraint; Cointegration; Stationarity; Ponzi scheme;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications

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