31 research outputs found

    The Impact of Real Exchange Rate Misalignment and Instability on Macroeconomic Performance in Sub-Saharan Africa

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    This study investigates the relationship between indicators of macroeconomic performance and real exchange rate (RER) misalignment and instability in Sub-Saharan Africa (SSA). Three measures of RER misalignment are used. There is ample evidence that countries which have pursued more predictable macroeconomic policies and lower levels of RER misalignment have experienced better economic performance. Also, it appears that higher levels of misalignments in the RER are accompanied by higher levels of macroeconomic instability. Empirical support is found for Edwards' model of the equilibrium RER and black market premia tend to show a greater degree of misalignment than alternative measures.Financial Economics, International Relations/Trade,

    How commodity prices respond to macroeconomic news

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    This paper analyzes the immediate, delayed and group responses of 20 commodity prices in four commodity groups (foods and livestock, crops, energy and metals) to macroeconomic"news"(unexpected announcements) in the United States between 1985 and 1989. It finds that macroeconomic news generally affects commodities within groups in the same direction - but there is no clear evidence that the prices of largely unrelated commodity groups react in the same way to macroeconomic shocks. The paper also notes that the business cycle must be carefully considered in analyzing the impact of macroeconomic news on commodity prices. It looks at variables such as inflation, exchange rates, interest rates, money stock and real activity. For each of the variables, the immediate impact of news is often different from the one-day-lagged impact - and different for different commodity groups.Economic Theory&Research,Environmental Economics&Policies,Markets and Market Access,Access to Markets,Insurance&Risk Mitigation

    World Bank adjustment lending and economic performance in sub-Saharan Africa in the 1980s : a comparison with other low income countries

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    The authors investigated the factors that influenced the participation of sub - Saharan African countries and all low-income countries in World Bank adjustment lending. They estimated how the Bank's adjustment programs affected economic performance in both regions. They found that the marginal contribution of Bank-supported adjustment programs to export performance has been postive and significant in sub - Saharan Africa, given the potentially important links between export growth and economic growth. But adjustment programs have not significantly affected economic growth in sub - Saharan Africa and have had a deleterious effect on investment there. This strengthens theargument of those who call for more explicit consideration of the initial conditions of the sub - Saharan African economies in the design, emphasis, and schedule of their adjustment programs. For one thing, a redefined but more important role for governments is in order for reforming African economies. Fiscal and monetary retrenchment are still indispensable, but it is critical that there be more public investment in infrastructure, human capital, and agricultural technology - to generate a supply response. Moreover, efforts must be made to make policy reforms more credible to the private sector and to improve program implementation. Also, governance and political stability - politically sensitive issues - critically affect the adoption, implementation, sustainability, and credibility of adjustment programs.Country Strategy&Performance,Economic Theory&Research,Achieving Shared Growth,Environmental Economics&Policies,Inequality

    Cotton sector strategies in West and Central Africa

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    Cotton production is truly a success story in West and Central Africa. The region is now the second largest exporter of lint, after the United States, with a world market share of 15 percent. Despite its strong performance in the past, the sector is characterized by several institutional and structural weaknesses that jeopardize its viability in an era of increasing globalization of the cotton industry. The sector's future performance will also depend on the implications of cotton sector policies in major producing countries such as the United States, the European Union, and China. This paper examines how the above factors may affect future growth of the region's cotton industry. It also identifies the changes that are required to enable countries in the region to fully exploit the sector's significant growth potential.Environmental Economics&Policies,Agricultural Research,Markets and Market Access,Economic Theory&Research,Crops&Crop Management Systems,Markets and Market Access,Crops&Crop Management Systems,Environmental Economics&Policies,Economic Theory&Research,Agricultural Research

    Sovereign bonds in developing countries : drivers of issuance and spreads

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    Abstract In the last decade there has been a new wave of sovereign bond issuances in Africa. What determines the ability of developing countries to issue bonds in international capital and what explains the spreads on these bonds? This paper examines these questions using a dataset that includes 105 developing countries during the period 1995–2014. We find that a country is more likely to issue a bond when, in comparison with non-issuing peers, it is larger in economic size, has higher per capita GDP, a lower public debt, and a more effective government. Spreads on sovereign bonds are lower for countries with strong external and fiscal positions, as well as robust economic growth and government effectiveness. We also find that primary spreads for the average Sub-Saharan African issuer are higher than in other regions. With regard to global factors, our results confirm the existing evidence that issuances are more likely during periods of global liquidity and high commodity prices, especially for Sub-Saharan African countries, and spreads are higher in periods of higher market volatility

    Private Investment and Endogenous Growth

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    This paper investigates empirically the factors that have influenced economic growth in Cameroon during 1963-96. The results, which support the endogenous-growth-type model, indicate that (1) the aggregate production function exhibits increasing returns to scale; (2) the impact of increases in private investment on growth is large, significant, and robust; (3) increases in government investment have a positive impact on growth; (4) human capital development plays an important role in output expansion; (5) positive externalities are generated by physical and human capital accumulation; and (6) growth is boosted by economic policies that foster external competitiveness and a prudent fiscal stance.

    Tax Revenue in Sub-Saharan Africa

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    An analysis of data for 39 sub-Saharan African countries during 1985–96 indicates that the variations in tax revenue-GDP ratios within this group are influenced by economic policies and the level of corruption. Namely, these ratios rise with declining inflation, implementation of structural reforms, rising human capital (a proxy for the provision of public services by the government), and declining corruption. The paper confirms that the tax revenue ratio rises with income, and that elements of a country’s tax base (such as the share of agriculture in GDP and the degree of openness) influence tax revenue.
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