Is it real? The long-run relation between terms of trade and current account deficits: the Ivory evidence

Abstract

The long-run relationship between current account deficits, domestic income, foreign income and foreign interest rates are estimated based on Ivorian time series data. The empirical results suggest that terms of trade along with domestic income, French income, and foreign real interest rates have significant long-term relationships with the current account deficit. The methodology is based on the co-integration technique. In addition, using the bootstrap technique for unit roots and regression respectively indicates the long-run relationship and the regression equation appear robust.