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Sustainability of current account deficits in Nigeria: evidence from the asymmetric NARDL approach

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  • Olufemi G. Onatunji

    (Redeemer’s University)

Abstract

This present paper revisits the issue of the sustainability of Nigeria’s current account deficit, using the intertemporal budget constraint (IBC) framework over the period 1986–2019. We employ the Non-linear Autoregressive Distributed Lag (NARDL) technique to detect the asymmetric mean-reversion behaviour of the current account deficit in Nigeria. The empirical results indicate that the asymmetric behaviour of the current account deficit is sustainable in Nigeria as the changes in imports respond differently to exports, although the extent of the sustainability is weak. Hence, the empirical outcomes of the paper offer considerable policy implications for policymakers seeking to sustain the current account deficit in Nigeria.

Suggested Citation

  • Olufemi G. Onatunji, 2023. "Sustainability of current account deficits in Nigeria: evidence from the asymmetric NARDL approach," SN Business & Economics, Springer, vol. 3(10), pages 1-22, October.
    • Handle: RePEc:spr:snbeco:v:3:y:2023:i:10:d:10.1007_s43546-023-00566-6
    DOI: 10.1007/s43546-023-00566-6
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    Keywords

    Current account deficits; Sustainability; NARDL cointegration; Nigeria;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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