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The Determinants of Current Account Imbalances in Malawi

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  • Kwalingana, Samson
  • Nkuna, Onelie

Abstract

Persistent current account imbalances in many least developed and emerging countries have excited considerable interest among researchers and policy makers to have a clear understanding of the dynamics of the current account and its role in macroeconomic outcomes. Based on the saving-investment theory, this paper uses cointegration analysis to identify the long run and short-run determinants of Malawi’s current account deficit using annual data from 1980 to 2006. Results suggest that openness, terms of trade, external debt accumulation, and current account liberalization fundamentally determined the current account deficit in Malawi. Furthermore, results reveal that these deficits have been, to a large extent, persistent.

Suggested Citation

  • Kwalingana, Samson & Nkuna, Onelie, 2009. "The Determinants of Current Account Imbalances in Malawi," MPRA Paper 14694, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14694
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    File URL: https://mpra.ub.uni-muenchen.de/14694/1/MPRA_paper_14694.pdf
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    References listed on IDEAS

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    1. Mohsin S. Khan & Malcolm D. Knight, 1983. "Determinants of Current Account Balances of Non-Oil Developing Countries in the 1970s: An Empirical Analysis (Analyse empirique des facteurs déterminant le solde des transactions courantes des pays e," IMF Staff Papers, Palgrave Macmillan, vol. 30(4), pages 819-842, December.
    2. Chinn, Menzie D. & Prasad, Eswar S., 2003. "Medium-term determinants of current accounts in industrial and developing countries: an empirical exploration," Journal of International Economics, Elsevier, vol. 59(1), pages 47-76, January.
    3. Graciela Kaminsky & Saul Lizondo & Carmen M. Reinhart, 1998. "Leading Indicators of Currency Crises," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 1-48, March.
    4. Sebastian Edwards, 2002. "Does the Current Account Matter?," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 21-76 National Bureau of Economic Research, Inc.
    5. Calderon Cesar Augusto & Chong Alberto & Loayza Norman V., 2002. "Determinants of Current Account Deficits in Developing Countries," The B.E. Journal of Macroeconomics, De Gruyter, vol. 2(1), pages 1-33, March.
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    7. Morris Goldstein & Mohsin S. Khan, 2017. "Income and Price Effects in Foreign Trade," World Scientific Book Chapters,in: TRADE CURRENCIES AND FINANCE, chapter 1, pages 3-81 World Scientific Publishing Co. Pte. Ltd..
    8. Fratzscher, Marcel & Müller, Gernot J. & Bussière, Matthieu, 2004. "Current accounts dynamics in OECD and EU acceding countries - an intertemporal approach," Working Paper Series 311, European Central Bank.
    9. Herrmann, Sabine & Jochem, Axel, 2005. "Determinants of current account developments in the central and east European EU member states - consequences for the enlargement of the euro area," Discussion Paper Series 1: Economic Studies 2005,32, Deutsche Bundesbank.
    10. Hamid Faruqee & Guy Debelle, 1996. "What Determines the Current Account? a Cross-Sectional and Panel Approach," IMF Working Papers 96/58, International Monetary Fund.
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    Cited by:

    1. Nurgun Topalli & İbrahim Dogan, 2016. "The structure and sustainability of current account deficit: Turkish evidence from regime switching," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(4), pages 570-589, June.
    2. Syed Jawaid & Syed Raza, 2013. "Dynamics of Current Account Deficit: A Lesson from Pakistan," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 19(3), pages 357-366, February.
    3. Natalya Ketenci, 2010. "Major Determinants of Current Account in Russia," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(4), pages 790-806, December.
    4. Chassem, Nacisse Palissy, 2011. "Effets de long terme du taux de change réel sur la balance commerciale nominale et réelle en zone Franc africaine
      [Long-run effects of real exchange rate on the nominal and real trade balance in Af
      ," MPRA Paper 30252, University Library of Munich, Germany.

    More about this item

    Keywords

    Current Account Balance; Saving-Investment Balances; Cointegration;

    JEL classification:

    • F0 - International Economics - - General

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