Determinants of Current Account Deficits in Sierra Leone: The Bound Testing Approach

نویسندگان

چکیده

This paper investigates the determinants of current account deficit in Sierra Leone, within framework Auto Regressive Distributed Lag (ARDL) bound testing approach with annual time series data from 1980 to 2020. The unit root results reveal that variables constitute both I(0) and I(1) series, while test confirms existence cointegration. confirm budget deficit, external debt real exchange rate are main drivers long run. Intuitively, result reveals is positively associated which validity twin hypothesis. also suggests a positive relationship between denoting accumulation leads worsening deficit. findings indicate consistent Mundell-Flemming model, predicts an appreciation can adversely affect country’s competitiveness position, leading short run indicates any disequilibrium model corrected at 65% adjustment speed annually. Also, finding shows that, coefficient lagged diagnostic explanatory for 73% variations Thus, government should broaden tax base reinforce implementation efficient administration system could tackle evasion avoidance, order enhance domestic revenue mobilization.

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ژورنال

عنوان ژورنال: Modern Economy

سال: 2022

ISSN: ['2152-7245', '2152-7261']

DOI: https://doi.org/10.4236/me.2022.1312083