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The sustainability of trade balances in Sub-Saharan Africa: panel cointegration tests with cross-section dependence


  • HASHIGUCHI, Yoshihiro
  • HAMORI, Shigeyuki


This paper investigates the sustainability of trade balances in the Sub-Saharan African regions, using both the panel unit root (IPS) test proposed by Im et al. (2003) and the cross-sectionally augmented version of the IPS (CIPS test) suggested by Pesaran (2007), where the former test is based on the assumption of cross-section independence and the latter allows for it. On the one hand, the empirical results based on the IPS test indicate that the balance of trade in Sub-Saharan African regions is sustainable. On the other hand, the empirical results of the CIPS test reveal that it is not. Since cross-section dependence was recognized using the CD test developed by Pesaran (2004), the empirical results based on the IPS test could be spurious.

Suggested Citation

  • HASHIGUCHI, Yoshihiro & HAMORI, Shigeyuki, 2010. "The sustainability of trade balances in Sub-Saharan Africa: panel cointegration tests with cross-section dependence," MPRA Paper 24054, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:24054

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    References listed on IDEAS

    1. Baharumshah, Ahmad Zubaidi & Lau, Evan & Fountas, Stilianos, 2003. "On the sustainability of current account deficits: evidence from four ASEAN countries," Journal of Asian Economics, Elsevier, vol. 14(3), pages 465-487, June.
    2. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    3. Arize, Augustine C., 2002. "Imports and exports in 50 countries: Tests of cointegration and structural breaks," International Review of Economics & Finance, Elsevier, vol. 11(1), pages 101-115, April.
    4. Shigeyuki Hamori, 2009. "The sustainability of trade accounts of the G-7 countries," Applied Economics Letters, Taylor & Francis Journals, vol. 16(17), pages 1691-1694.
    5. Wu, Jyh-Lin, 2000. "Mean reversion of the current account: evidence from the panel data unit-root test," Economics Letters, Elsevier, vol. 66(2), pages 215-222, February.
    6. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    7. Paresh Kumar Narayan & Seema Narayan, 2005. "Are exports and imports cointegrated? Evidence from 22 least developed countries," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 375-378.
    8. Manuchehr Irandoust & Johan Ericsson, 2004. "Are Imports and Exports Cointegrated? An International Comparison," Metroeconomica, Wiley Blackwell, vol. 55(1), pages 49-64, February.
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    Cited by:

    1. repec:ebl:ecbull:eb-17-00810 is not listed on IDEAS
    2. Shigeyuki Hamori & Yoshihiro Hashiguchi, 2012. "Small sample properties of CIPS panel unit root test under conditional and unconditional heteroskedasticity," Economics Bulletin, AccessEcon, vol. 32(3), pages 2353-2365.
    3. Gnimassoun, Blaise & Coulibaly, Issiaka, 2014. "Current account sustainability in Sub-Saharan Africa: Does the exchange rate regime matter?," Economic Modelling, Elsevier, vol. 40(C), pages 208-226.

    More about this item


    sustainability; trade balances; Sub-Saharan Africa; CIPS test;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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