ENSEA FORTNIGHT RESEARCH PAPER: (2nd Half of December)

FORTNIGHT PAPER (2EME QUINZAINE DECEMBRE)_Plan de travail 1

Researchers, Professional PhD Students and Students in Statistics and Applied Economics, welcome to your new FORTHNIGHT PAPER section! Your window dedicated to the promotion of ENSEA research articles.

Degree of Sustainability of Current Account: Evidence from Côte d’Ivoire using a Non-linear Approach;

is the title of the research article for the 2nd half of December.

This research paper was jointly written by Dr Hugues Kouadio & KOUAKOU Romain, both Lecturers-Researchers at ENSEA Abidjan.

Abstract: ”The current account deficit is a macroeconomic indicator that provides information on the health of an economy. Its sustainability is particularly crucial for developing countries such as Côte d’Ivoire, one of the largest economies in West Africa. Given the country’s exposure to external vulnerability, this paper analysed the degree of sustainability of its current account. Beyond this, the study looked at the resilience of the economy to external shocks by examining how exports behave following an asymmetric shock on imports plus interest on external borrowing. To this end, the model developed by Shin et al. (2014) was applied to the intertemporal approach to current account sustainability using quarterly macroeconomic data from 1985q1 to 2017q4. The study found that Côte d’Ivoire’s current account balance is sustainable. However, this sustainability is weak in the sense of Hakkio and Rush (1991), thus leading to a high risk of government failure in this respect. Also, the study shows that exports react differently to asymmetric shocks on increased imports, with a return to equilibrium often very slow. Therefore, the strengthening and stability of the socio-political environment is to be encouraged, as well as the implementation of policies aimed at sound public finance management and minimising the economy’s vulnerability to external shocks”