An economy’s ability to provide food, energy, and manufactured goods for its population to consume reduces the chance that it experiences high consumer price inflation. However, no research has been done on exactly how much of these critical goods a country needs to be able to produce to keep inflation low and manageable. In this paper, I use an empirical risk reduction model to analyze over seven hundred and fifty data points from twenty-five countries over a thirty-eight-year period to show that a country can significantly reduce it chance of experiencing medium inflation and virtually eliminate the risk of hyperinflation by improving productive capacity such that its output of critical goods is approximately 174% of what the average person would consume in a country with a high standard of living. This effect remains even after adjusting for the growth in government expenditures. Unfortunately, fewer than one third of countries have the capacity to produce enough of these critical items to reliably keep inflation low. The policy recommendation that flows from these findings is that countries should engage in industrial policy to support the stable production of food, energy, and high-value manufactured goods until they reach the production threshold of 174% of desired consumption.
{"title":"Inflation and Productive Capacity - An Empirical Risk Reduction Model","authors":"Jonathan L. Wilson","doi":"10.2139/ssrn.3912154","DOIUrl":"https://doi.org/10.2139/ssrn.3912154","url":null,"abstract":"An economy’s ability to provide food, energy, and manufactured goods for its population to consume reduces the chance that it experiences high consumer price inflation. However, no research has been done on exactly how much of these critical goods a country needs to be able to produce to keep inflation low and manageable. In this paper, I use an empirical risk reduction model to analyze over seven hundred and fifty data points from twenty-five countries over a thirty-eight-year period to show that a country can significantly reduce it chance of experiencing medium inflation and virtually eliminate the risk of hyperinflation by improving productive capacity such that its output of critical goods is approximately 174% of what the average person would consume in a country with a high standard of living. This effect remains even after adjusting for the growth in government expenditures. Unfortunately, fewer than one third of countries have the capacity to produce enough of these critical items to reliably keep inflation low. The policy recommendation that flows from these findings is that countries should engage in industrial policy to support the stable production of food, energy, and high-value manufactured goods until they reach the production threshold of 174% of desired consumption.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131026435","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, I study the effects of hometown favoritism on intercity investments in China, or more specifically, whether and how local government officials will bring more investments from their hometown to their workplace. In generalized difference-in-differences specifications, I find that the intercity investments, measured by the total paid-in capital of newly registered firms, increase by about 15%. Further evidence supports the explanation that officials reduce the information asymmetry and thus entry barriers for businesspeople in their hometown, which is incentivized by promotion prospects, rather than that officials and businesspeople form collusive and corruptive deals. Such hometown favoritism is beneficial to productivity and local development. Moreover, I structurally estimate a discrete choice model of firms' location choices, and the estimates also indicate that officials reduce the entry costs for firms from their hometown. The effects of hometown favoritism are amplified in the intercity investment networks.
{"title":"Hometown Favoritism and Intercity Investment Networks in China","authors":"Xiangyun Shi","doi":"10.2139/ssrn.3745064","DOIUrl":"https://doi.org/10.2139/ssrn.3745064","url":null,"abstract":"In this paper, I study the effects of hometown favoritism on intercity investments in China, or more specifically, whether and how local government officials will bring more investments from their hometown to their workplace. In generalized difference-in-differences specifications, I find that the intercity investments, measured by the total paid-in capital of newly registered firms, increase by about 15%. Further evidence supports the explanation that officials reduce the information asymmetry and thus entry barriers for businesspeople in their hometown, which is incentivized by promotion prospects, rather than that officials and businesspeople form collusive and corruptive deals. Such hometown favoritism is beneficial to productivity and local development. Moreover, I structurally estimate a discrete choice model of firms' location choices, and the estimates also indicate that officials reduce the entry costs for firms from their hometown. The effects of hometown favoritism are amplified in the intercity investment networks.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133990326","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-08-18DOI: 10.6007/ijarafms/v10-i2/7474
Eric Okwuchukwu Nwajiaku, A. Ananwude, Victoria Ogochukwu Obi-Nwosu
This study examined the effect of financial deepening on entrepreneurial growth in Nigeria. Following the approach of the Granger Causality test with Autoregressive Distribute Lag (ARDL) technique of model estimation using data from 1986 to 2018, there is no significant effect of financial deepening on entrepreneurial growth. Entrepreneurial growth was found to have significantly influenced financial deepening through banking and insurance sector deepening. Consequently, the Central Bank of Nigeria (CBN) should encourage commercial banks to lend more for entrepreneurial activities which will in turn improve our gross domestic product. This can be achieve if the CBN can lower its monetary policy rate to a single digit as against the current double digit (14%). It would be ideal for the government (Federal, State and Local) to establish entrepreneurial training/skill acquisition centres in all tertiary institutions in the country. This will help a large fraction of the graduates of these institutions to inculcate entrepreneurial spirit to setting up small and medium scale enterprises in every part of the country.
{"title":"Financial Deepening and Entrepreneurial Growth in Nigeria: A Time Series Analysis (1986 – 2018)","authors":"Eric Okwuchukwu Nwajiaku, A. Ananwude, Victoria Ogochukwu Obi-Nwosu","doi":"10.6007/ijarafms/v10-i2/7474","DOIUrl":"https://doi.org/10.6007/ijarafms/v10-i2/7474","url":null,"abstract":"This study examined the effect of financial deepening on entrepreneurial growth in Nigeria. Following the approach of the Granger Causality test with Autoregressive Distribute Lag (ARDL) technique of model estimation using data from 1986 to 2018, there is no significant effect of financial deepening on entrepreneurial growth. Entrepreneurial growth was found to have significantly influenced financial deepening through banking and insurance sector deepening. Consequently, the Central Bank of Nigeria (CBN) should encourage commercial banks to lend more for entrepreneurial activities which will in turn improve our gross domestic product. This can be achieve if the CBN can lower its monetary policy rate to a single digit as against the current double digit (14%). It would be ideal for the government (Federal, State and Local) to establish entrepreneurial training/skill acquisition centres in all tertiary institutions in the country. This will help a large fraction of the graduates of these institutions to inculcate entrepreneurial spirit to setting up small and medium scale enterprises in every part of the country.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125202687","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a two-country model with heterogeneous firms, we show that the optimal level and welfare gains of foreign direct investment (FDI) subsidies critically depend on how they are funded. In a setting that resembles common tax distortions in emerging markets, we compare the effects of distortionary taxes that are imposed to fund FDI subsidies and examine their cross-country spillovers. Our model predicts that the optimal level of FDI subsidies and the associated welfare gains are much lower than those for non-distortionary taxes. FDI subsidies funded by distortionary taxes are also found to be beggar-thy-neighbor, although they generate positive cross-country welfare spillovers if funded by non-distortionary labor income taxes.
{"title":"Benefits of FDI Subsidies: The Role of Funding Sources","authors":"Wontae Han, Jian Wang, Xiao Wang","doi":"10.2139/ssrn.3693786","DOIUrl":"https://doi.org/10.2139/ssrn.3693786","url":null,"abstract":"Using a two-country model with heterogeneous firms, we show that the optimal level and welfare gains of foreign direct investment (FDI) subsidies critically depend on how they are funded. In a setting that resembles common tax distortions in emerging markets, we compare the effects of distortionary taxes that are imposed to fund FDI subsidies and examine their cross-country spillovers. Our model predicts that the optimal level of FDI subsidies and the associated welfare gains are much lower than those for non-distortionary taxes. FDI subsidies funded by distortionary taxes are also found to be beggar-thy-neighbor, although they generate positive cross-country welfare spillovers if funded by non-distortionary labor income taxes.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-08-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129130215","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
PurposeMora and Acevedo (2019) report that the government spending multipliers in Latin American countries are notably higher than what is typically reported for developed economies. Latin American countries have been inclined toward using procyclical fiscal policies. Those policies have been perceived as being effective at mitigating the effects of the 2008–2009 Great Recession. This study aims to estimate the government spending multiplier using Latin American panel data from 19 Latin American countries from 2000 to 2018. The estimates are conditional on the extent of openness, capital mobility and economic freedom. Based on the results, the latter is important: the less economically free a country, the larger its spending multiplier. Lower economic freedom in Latin American countries can help to account for their large spending multipliers. In particular, restrictions on international trade are positively associated with multipliers. This is the case even while controlling the trade share of GDP. Design/methodology/approachThe authors provide regression results that are conditional on the extent of openness, capital mobility and economic freedom. FindingsThe less economically free a country, the larger its spending multiplier. Lower economic freedom in Latin American countries can help to account for their large spending multipliers. In particular, restrictions on international trade are positively associated with multipliers. This is the case even while controlling the trade share of GDP. Originality/valueTo the best of the authors’ knowledge, this is first study to estimate the fiscal multiplier conditional on economic freedom levels. The authors provide correctly calculated multipliers conditional on different levels of economic freedom. The authors point the way to future studies considering the effectiveness of fiscal policy conditional on institutional/policy quality.
{"title":"The Government Spending Multiplier in Latin American Countries: Does the Institutional Environment Matter?","authors":"Rafael A Acevedo, J. Mora, A. Young","doi":"10.2139/ssrn.3735100","DOIUrl":"https://doi.org/10.2139/ssrn.3735100","url":null,"abstract":"\u0000PurposeMora and Acevedo (2019) report that the government spending multipliers in Latin American countries are notably higher than what is typically reported for developed economies. Latin American countries have been inclined toward using procyclical fiscal policies. Those policies have been perceived as being effective at mitigating the effects of the 2008–2009 Great Recession. This study aims to estimate the government spending multiplier using Latin American panel data from 19 Latin American countries from 2000 to 2018. The estimates are conditional on the extent of openness, capital mobility and economic freedom. Based on the results, the latter is important: the less economically free a country, the larger its spending multiplier. Lower economic freedom in Latin American countries can help to account for their large spending multipliers. In particular, restrictions on international trade are positively associated with multipliers. This is the case even while controlling the trade share of GDP.\u0000\u0000\u0000Design/methodology/approachThe authors provide regression results that are conditional on the extent of openness, capital mobility and economic freedom.\u0000\u0000\u0000FindingsThe less economically free a country, the larger its spending multiplier. Lower economic freedom in Latin American countries can help to account for their large spending multipliers. In particular, restrictions on international trade are positively associated with multipliers. This is the case even while controlling the trade share of GDP.\u0000\u0000\u0000Originality/valueTo the best of the authors’ knowledge, this is first study to estimate the fiscal multiplier conditional on economic freedom levels. The authors provide correctly calculated multipliers conditional on different levels of economic freedom. The authors point the way to future studies considering the effectiveness of fiscal policy conditional on institutional/policy quality.\u0000","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132608517","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. Bérgolo, G. Burdín, Mauricio De Rosa, Matias Giaccobasso, Martin Leites
Based on detailed administrative tax records, we implement a bunching design to explore how individual taxpayers respond to personal income taxation in Uruguay. We estimate a very modest elasticity of taxable income at the first kink point (0.06) driven by a combination of gross labour income and deductions responses. Taxpayers use personal deductions more intensively close to the kink point and underreport income to the tax authority. Our results suggest that the efficiency costs of taxation are not necessarily large in contexts characterised by limited deduction opportunities. Policy efforts should be directed at broadening the tax base and improving enforcement capacity
{"title":"Digging into the Channels of Bunching: Evidence From the Uruguayan Income Tax","authors":"M. Bérgolo, G. Burdín, Mauricio De Rosa, Matias Giaccobasso, Martin Leites","doi":"10.2139/ssrn.3365110","DOIUrl":"https://doi.org/10.2139/ssrn.3365110","url":null,"abstract":"Based on detailed administrative tax records, we implement a bunching design to explore<br>how individual taxpayers respond to personal income taxation in Uruguay. We estimate<br>a very modest elasticity of taxable income at the first kink point (0.06) driven by<br>a combination of gross labour income and deductions responses. Taxpayers use personal<br>deductions more intensively close to the kink point and underreport income to the tax authority.<br>Our results suggest that the efficiency costs of taxation are not necessarily large in<br>contexts characterised by limited deduction opportunities. Policy efforts should be directed<br>at broadening the tax base and improving enforcement capacity","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-06-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122556646","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Contributing to the controversial issue on the impact of government spending on economic growth, this paper shows that government spending has both long-run and short-run impacts in stimulating aggregate output in Thailand during the floating exchange rate regime. In addition, real money supply can also stimulate aggregate output in the long run even though it does not have any contribution to economic growth in the short run. Based on quarterly dataset during 1997Q3 to 2017Q4, the results suggest that expansionary fiscal policy is effective under the floating exchange rate regime.
{"title":"Government Expenditures and Economic Growth: A Cointegration Analysis for Thailand under the Floating Exchange Rate Regime","authors":"Komain Jiranyakul","doi":"10.2139/ssrn.3597334","DOIUrl":"https://doi.org/10.2139/ssrn.3597334","url":null,"abstract":"Contributing to the controversial issue on the impact of government spending on economic growth, this paper shows that government spending has both long-run and short-run impacts in stimulating aggregate output in Thailand during the floating exchange rate regime. In addition, real money supply can also stimulate aggregate output in the long run even though it does not have any contribution to economic growth in the short run. Based on quarterly dataset during 1997Q3 to 2017Q4, the results suggest that expansionary fiscal policy is effective under the floating exchange rate regime.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"129 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114647606","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The study examines the impact of public expenditure shocks on human capital development in in the Presence of Structural Breaks: Evidence from Nigeria. The nature of this study necessitates the use of a time–series research design and an extensive reliance on secondary data sourced from the Central Bank of Nigeria (CBN) statistical bulletins, for the period 1981-2018. The method of data analysis utilized a battery of econometric applications often used in most contemporary economic time-series studies. First, the descriptive and correlation analysis is presented. After that the Augmented Dickey Fuller (ADF) unit root test and Zivot and Andrews Unit root for structural breaks is applied and this is followed by the co-integration test both with and without structural breaks. The Wald test for significance of the structural breaks was also employed and then the Variance Autoregressive (VAR) technique is then utilized. Finally, the impulse-response functions is conducted The study findings reveal that response of HCAP to innovations in HEXP is shown to exhibit oscillations over the period horizon with initial declines showing in the 1st quarter after the shock. An immediate rebound in HCAP response is observed beginning from the 2nd quarter after the shock and this positive rebound is sustained up to 10th quarter after the shock. However, one standard deviation shocks to EDEXP is seen to have immediate positive effects on HCAP lasting till 2-3 quarters after the shock and then followed by a decline sustained at a little below the baseline and declining further in the 7th quarter but again we see a slight rebound which reverts. On the overall, the shocks shows high potentials for asymptotic convergence and stability in HCAP. However, the response of HCAP to investment shocks is the most destabilizing. Furthermore, we observe that the impulse response functions are robust to structural breaks. The evidence of structural breaks reveals few instances of variations with the main analysis without breaks especially in relation the public expenditure. The result shows that, with the inclusion of breaks, the sustained positive effect in HCAP of a one standard deviation shock in HEXP is still observed and also sustained up to 10th quarter after the shock. Again just like in the case of no structural breaks, we also find that the shocks in EDEXP shows high potentials for asymptotic convergence and stability in the response of HCAP but in the case of investment, we find some differences in the response of HCAP comparing with and without structural breaks. The study recommends that need for government to ensure efficiency in public expenditures.
该研究考察了在存在结构性断裂的情况下，公共支出冲击对人力资本发展的影响:来自尼日利亚的证据。本研究的性质需要使用时间序列研究设计，并广泛依赖于1981-2018年期间来自尼日利亚中央银行(CBN)统计公报的二手数据。数据分析方法利用了在大多数当代经济时间序列研究中经常使用的一系列计量经济学应用。首先，进行了描述性和相关性分析。然后对结构断裂进行增广Dickey Fuller (ADF)单位根检验和Zivot and Andrews单位根检验，然后对有无结构断裂进行协整检验。还采用了Wald检验结构断裂的显著性，然后使用方差自回归(VAR)技术。研究结果表明，HCAP对HEXP创新的响应在一段时间内呈现振荡，在冲击后的第一季度出现初始下降。从冲击后的第二季度开始，观察到HCAP反应的立即反弹，这种积极的反弹持续到冲击后的第十季度。然而，对EDEXP的一个标准差冲击被认为对HCAP有直接的积极影响，这种影响持续到冲击后的2-3个季度，然后持续下降，略低于基线，并在第7季度进一步下降，但我们再次看到一个轻微的反弹。总体而言，冲击在HCAP中显示出较高的渐近收敛和稳定性潜力。然而，HCAP对投资冲击的反应是最不稳定的。此外，我们观察到脉冲响应函数对结构断裂具有鲁棒性。结构性断裂的证据表明，在没有断裂的情况下，与主要分析的变化很少，特别是在公共支出方面。结果表明，在包含中断的情况下，在HEXP中仍然观察到一个标准差的冲击对HCAP的持续积极影响，并且在冲击后持续到第10个季度。同样，就像在没有结构性断裂的情况下一样，我们也发现EDEXP中的冲击在HCAP的响应中表现出很高的渐近收敛和稳定性潜力，但在投资的情况下，我们发现HCAP在有和没有结构性断裂的情况下的响应有所不同。该研究建议政府有必要确保公共支出的效率。
{"title":"Public Expenditure Shocks and Human Capital Development in the Presence of Structural Breaks: Evidence from Nigeria","authors":"Ndubuisi Jeffery Jamani, Issac Ukarin","doi":"10.2139/ssrn.3588417","DOIUrl":"https://doi.org/10.2139/ssrn.3588417","url":null,"abstract":"The study examines the impact of public expenditure shocks on human capital development in in the Presence of Structural Breaks: Evidence from Nigeria. The nature of this study necessitates the use of a time–series research design and an extensive reliance on secondary data sourced from the Central Bank of Nigeria (CBN) statistical bulletins, for the period 1981-2018. The method of data analysis utilized a battery of econometric applications often used in most contemporary economic time-series studies. First, the descriptive and correlation analysis is presented. After that the Augmented Dickey Fuller (ADF) unit root test and Zivot and Andrews Unit root for structural breaks is applied and this is followed by the co-integration test both with and without structural breaks. The Wald test for significance of the structural breaks was also employed and then the Variance Autoregressive (VAR) technique is then utilized. Finally, the impulse-response functions is conducted The study findings reveal that response of HCAP to innovations in HEXP is shown to exhibit oscillations over the period horizon with initial declines showing in the 1st quarter after the shock. An immediate rebound in HCAP response is observed beginning from the 2nd quarter after the shock and this positive rebound is sustained up to 10th quarter after the shock. However, one standard deviation shocks to EDEXP is seen to have immediate positive effects on HCAP lasting till 2-3 quarters after the shock and then followed by a decline sustained at a little below the baseline and declining further in the 7th quarter but again we see a slight rebound which reverts. On the overall, the shocks shows high potentials for asymptotic convergence and stability in HCAP. However, the response of HCAP to investment shocks is the most destabilizing. Furthermore, we observe that the impulse response functions are robust to structural breaks. The evidence of structural breaks reveals few instances of variations with the main analysis without breaks especially in relation the public expenditure. The result shows that, with the inclusion of breaks, the sustained positive effect in HCAP of a one standard deviation shock in HEXP is still observed and also sustained up to 10th quarter after the shock. Again just like in the case of no structural breaks, we also find that the shocks in EDEXP shows high potentials for asymptotic convergence and stability in the response of HCAP but in the case of investment, we find some differences in the response of HCAP comparing with and without structural breaks. The study recommends that need for government to ensure efficiency in public expenditures.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126787578","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the extent to which business cycles of 15 ECOWAS countries are synchronized; which is one of the indicators of an optimum currency area. We employ wavelet tools to compute business cycle similarities and the distance matrix. Wavelet-spectra clustering indicates that Gambia, Sierra Leone, Liberia, Mali (we give this group the acronym GSLIM) business cycles are dissimilar to the rest of the ECOWAS. These four countries count only three percent of total ECOWAS gross domestic product (GDP) and will very likely form the Eco-periphery within the West African Monetary Zone. The Eco-core group, however, is not very homogenous as it consists of three synchronized groups led, in terms of size, by Nigeria, Ghana and Burkina Faso respectively. Core-periphery patterns present a challenge to the success of a monetary union, because, if ECOWAS countries decide to launch the ECO and thus implement a common monetary policy, countries that form the periphery group may not optimally benefit from this monetary union. This challenge is however not insurmountable; ECO countries will need to put in place risk-sharing mechanisms that will help asynchronous countries to reduce the cost of giving up their monetary policy tools.
{"title":"Business Cycle Synchronicity Within ECOWAS: The Eco-Core and the Eco- Periphery","authors":"O. Habimana, Vamuyan A. Sesay, Yvonne Umulisa","doi":"10.2139/ssrn.3708812","DOIUrl":"https://doi.org/10.2139/ssrn.3708812","url":null,"abstract":"This paper investigates the extent to which business cycles of 15 ECOWAS countries are synchronized; which is one of the indicators of an optimum currency area. We employ wavelet tools to compute business cycle similarities and the distance matrix. Wavelet-spectra clustering indicates that Gambia, Sierra Leone, Liberia, Mali (we give this group the acronym GSLIM) business cycles are dissimilar to the rest of the ECOWAS. These four countries count only three percent of total ECOWAS gross domestic product (GDP) and will very likely form the Eco-periphery within the West African Monetary Zone. The Eco-core group, however, is not very homogenous as it consists of three synchronized groups led, in terms of size, by Nigeria, Ghana and Burkina Faso respectively. Core-periphery patterns present a challenge to the success of a monetary union, because, if ECOWAS countries decide to launch the ECO and thus implement a common monetary policy, countries that form the periphery group may not optimally benefit from this monetary union. This challenge is however not insurmountable; ECO countries will need to put in place risk-sharing mechanisms that will help asynchronous countries to reduce the cost of giving up their monetary policy tools.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"180 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-02-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114003837","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The thrust of this study was to investigate and analyses the impact of high and growing government external debt on the economic growth of Namibia by using secondary data from Bank of Namibia, IMF and World Bank. Over the first five years the country went through one of the longest and largest boom periods, thereafter the bottom fell out, and it’s now clear with the strongest and most sustained growth levels seen since independence, thereafter the bottom fell out, and as is now clear, much of this growth was driven by debt, both public and private. This result indicates that for Namibia, external borrowing has had an influence on the country’s Gross Domestic Product (GDP). In this regard, effective debt management policies and strategies aimed at reducing the cost and risks associated with external debt are a must for ensuring a sustainable path of external debt to promote economic growth.
{"title":"The Impact of High and Growing Government External Debt on Economic Growth of Namibia","authors":"Hashali Fillemon","doi":"10.2139/ssrn.3516341","DOIUrl":"https://doi.org/10.2139/ssrn.3516341","url":null,"abstract":"The thrust of this study was to investigate and analyses the impact of high and growing government external debt on the economic growth of Namibia by using secondary data from Bank of Namibia, IMF and World Bank. Over the first five years the country went through one of the longest and largest boom periods, thereafter the bottom fell out, and it’s now clear with the strongest and most sustained growth levels seen since independence, thereafter the bottom fell out, and as is now clear, much of this growth was driven by debt, both public and private. This result indicates that for Namibia, external borrowing has had an influence on the country’s Gross Domestic Product (GDP). In this regard, effective debt management policies and strategies aimed at reducing the cost and risks associated with external debt are a must for ensuring a sustainable path of external debt to promote economic growth.","PeriodicalId":247622,"journal":{"name":"ERN: Fiscal & Monetary Policy in Developing Economies (Topic)","volume":"3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114624233","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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