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This paper applies the Permanent Income Model to the non-oil current accounts of the major oil exporters to assess the extent to which national consumption decisions in these countries are made on the basis of permanent versus current income. A test of whether the return on oil wealth and oil balance coefficients sum to unity is accepted for all specifications that adjust the return on wealth for future population changes. For oil-exporting countries outside Africa, around half of the fluctuations in the private sector non-oil balance are driven by considerations of changes in permanent income (the return on oil wealth) rather than current income. By contrast, for the public sector and African countries permanent income has little or no effect.

The study analyzed the determinants of the current account balance in Nigeria between 1981 and 2020, using three different models: oil current account balance, non-oil current account balance, and total current account balance. The dependent variables were the respective current account balances, while the explanatory variables included income, consumption, investment, budget deficit, exchange rate, financial deepening, broad money supply, unemployment rate, inflation rate, and age dependency ratio. The data was analyzed using the autoregressive distributed lag (ARDL) technique. The results indicated that budget deficit, exchange rate, and financial deepening were statistically significant in determining the oil current account position in the short run, while income, budget deficit, and exchange rate were statistically significant in the long run. For non-oil current account position, budget deficit, money supply, unemployment rate, inflation rate, and age dependency ratio were significant determinants in the short run, while budget deficit, money supply, unemployment rate, and inflation rate were significant in the long run. In the case of the total current account position, budget deficit, financial deepening, unemployment rate, and age dependency ratio were significant in the short run, while budget deficit, unemployment rate, and age dependency ratio were significant in the long run. The study suggests that policymakers in Nigeria should focus on reducing budget deficits, promoting financial deepening, and maintaining stable exchange rates to improve the current account balance, particularly in the short run.

This study investigates the impact of non-oil export on the Nigeria balance of payment between 1981 and 2020. To achieve the broad objective, two specific objectives were set out, viz: investigate the impact of non-oil export on the Nigeria balance of payment; and examine the level of impact of exchange rate volatility on balance of payment in Nigeria. Using the Autoregressive Distributed Lagged (ARDL) and Error Correction Model (ECM), the findings of the study show that non-oil exports have had a strong positive impact on Nigeria’s balance of payment within the period under study both in the short and long-run. It shows that a percentage increase in non-oil export increases the balance of payment (surplus) by 31.47 % in the long-run. However, exchange rate was shown to have had a negative blow on Nigeria’s balance of payment, though not statistically significant. The study therefore recommend among others that, for Nigeria to enjoy a surplus balance of payment, which is one of her major macroeconomic goals, there is the need to shift attention to the non-oil sector which has always been the main source of her foreign exchange earnings prior to the discovery of crude oil.

This study empirically investigates the existence of twin deficits—the impact of fiscal policy on the current account—among selected major oil-exporting countries. Given the huge effects of the oil proceeds on these economies, the study separates the effects of oil on the fiscal balance from its effect on the current account balance. The investigation took a further step by grouping these countries—based on their fiscal policy actions over the period of years under review—into pro-cyclical and counter-cyclical fiscal countries. In line with the existing literature, the impact of fiscal balance on the current account balance takes into consideration the contemporaneous effects brought about by exchange rate fluctuations, the growth in GDP, rate of openness and the growth in money supply. The models are estimated based on a panel of 31 oil-exporting countries over the period 1984–2013, using the two-stage least squares estimation techniques. The results from all countries estimations reveal the existence of twin-deficit in the total economy. In the non-oil economy, on the other hand, the evidence of twin-deficit disappears. This evidence is also reported in the counter-cyclical fiscal countries. Results from pro-cyclical fiscal countries indicated the total opposite, revealing the existence of twin-deficit in the non-oil economy, while this evidence does not occur in the total economy. The indisputable conclusion is that oil dominance continues to blur the existence of twin deficits among the oil-exporting countries.

This paper examines the relationship between fiscal and external balances in MENA oil versus non-oil countries in the context of the twin deficits hypothesis (TDH) using Panel Vector Autoregression- Generalized Methods of Moments PVAR GMM estimation, Granger Causality and IRFs. The essence of this analysis is to assess the vulnerability of fiscal and external balances to oil price dynamics and regional geopolitics in the region. Results show that a twin-deficit problem exists in MENA oil-rich countries only while the problem does not exist in non-oil ones. This affirms the hypothesis that oil dependence results in high fiscal vulnerability to geopolitical shocks that automatically transmits to external balances. While a TDH isn't proven to exist in non-oil countries, fiscal and external balances problems result from longstanding structural factors. A high reliance on tourism revenues and remittances as main sources of foreign currency receipts (together with poor tax administration and enlarged current spending bills) makes those countries more vulnerable to domestic and external shocks; reflected in both growing fiscal and current account deficits. A large imports sector and relatively poor exporting capacity also contribute to weakening external accounts. The main policy recommendations for MENA oil-rich countries rely in the importance of strengthening the non-oil sector in order to diversify domestic sources of revenues. Adopting flexible exchange rates is recommended to decrease the vulnerability of the external shocks to oil price dynamics. For non-oil MENA regions, fiscal consolidation, reforming current spending and strengthening tax administrations are crucial to improve fiscal performance. Export-led growth strategies and inclusive growth policies would also contribute to improving external accounts in the examined economies.

This paper estimates factors affecting demand for Fund financing by Low-Income Countries (LICs) in response to policy and exogenous shocks. Various economic variables including reserve coverage, current account balance to GDP, real GDP growth, macroeconomic stability, and terms of trade shocks are found to be significant determinants of Fund financing. Moreover, global conditions, including changes in real oil and non-oil commodity prices and world trade, are also significant. Therefore, the demand for Fund financing by LICs is likely to be cyclical in response to common shocks with its intensity depending on the severity and persistence of adverse shocks.

This study empirically investigates the link between fiscal policy and the current account in Nigeria. Given the enormous influence of the oil revenue on Nigeria’s economy, the study separates the effects of oil on the fiscal balance and the current account balance. In line with existing literature, the causal link between the fiscal balance and current account takes into consideration the contemporaneous effects on the current account balance brought about by exchange-rate fluctuations, the growth in GDP, and the growth in money supply. The models are estimated using time-series data from 1970 to 2012, using the Johansen estimation techniques. The results from the estimation results reveal the existence of a positive and stable relationship between government budget surplus and the current account balance in the overall economy. In the non-oil segment, on the other hand, there is evidence of a twin-deficit, a fact which has been blurred by proceeds from the oil revenue. The unequivocal conclusion is that the country remains over-reliant on the revenue generated by oil; also, the proceeds from oil have not yet trickled down to the rest of the economy.