IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v9y2021i1p1970870.html
   My bibliography  Save this article

Determinants of Trade Balance in West African Economic and Monetary Union (WAEMU): Evidence from heterogeneous panel analysis

Author

Listed:
  • Yaya Keho
  • Robert Read

Abstract

This study investigates the determinants of the trade balance in West African and Monetary Union (WAEMU) over the period 1975–2017. We employ the Mean Group (MG) estimator along with the grouped mean version of Dynamic OLS (DOLS) and Fully Modified OLS (FMOLS) to deal with both endogeneity and cross-country heterogeneity. The results reveal that the trade balance is negatively related to domestic and foreign income whereas real effective exchange rate depreciation improves the trade balance in the long-run. However, the results do not confirm the short-run worsening of trade balance suggested by the J-curve. In the short-run, the trade balance is sensitive only to foreign real income but not to domestic income and real exchange rate. The country-level estimates show heterogeneity in the response of the trade balance to real exchange rate, domestic and foreign income. Overall, the findings of this study suggest that policies aimed at improving the trade balance should focus on the domestic production of imported goods, rather than devaluation.

Suggested Citation

  • Yaya Keho & Robert Read, 2021. "Determinants of Trade Balance in West African Economic and Monetary Union (WAEMU): Evidence from heterogeneous panel analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1970870-197, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1970870
    DOI: 10.1080/23322039.2021.1970870
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2021.1970870
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23322039.2021.1970870?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ashiru Ibrahim & Michael Rabiu Abdulmalik, 2023. "Do trade openness and governance matter for economic growth in Africa? A case of EAC and WAEMU countries," International Economics and Economic Policy, Springer, vol. 20(3), pages 389-412, July.
    2. Cham, Yaya, 2023. "Monetary Approach to Balance of Payments: Empirical Evidence from ECOWAS Countries," MPRA Paper 118374, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1970870. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.