An empirical evaluation of Nigeria's inter-temporal current account solvency

This paper sets out to assess the state of capital mobility in Nigeria through the inter-temporal solvency approach. It is an attempt to identify the extent to which actual current account movements have deviated from what is considered optimal for international competitiveness. From this, one can infer a balance between export and import flows and the need to adopt macroeconomic policies necessary to ensure a sustainable external position. The results indicate the existence of a long-run equilibrium relationship between imports (including net investment income and transfers) and exports. However, in terms of current account sustainability, the results indicate otherwise. The presence of a structural break in the relationship between imports and exports is observed.