Dynamics of current account deficits over the economic cycle of countries with an emergence horizon

Abstract

This article highlights the different phases of a business cycle in the presence of persistent current account deficits. The relationship is facilitated by the quantile regression method. In this method the regression parameters are determined around the conditional mean in the quadratic form of the deficit dynamics. The empirical analyses are thus carried out on six (06) African countries with fixed and different emergence horizons covering the period 2005q1-2014q4. The results of the individual estimations lead to policy recommendations discussed according to whether the effects are procyclical for Côte d'Ivoire, countercyclical for Benin, Mali, Niger and Democratic Republic of São Tomé and Príncipe and both procyclical and countercyclical for the Democratic Republic of Congo for specific quantiles.