Common Stochastic Trends in the Current Account

Solow residuals are used as proxies for productivity shocks in many empirical studies.Considering the shortcomings of this approach this paper proposes the common trends approach as an alternative.The common trends econometric technique is utilized here in an attempt to identify and analyze the long run effects of country-specific and global productivity shocks on fluctuations in investment and the current account.The theoretical framework utilized provides long run restrictions relevant for identifying global and country-specific productivity shocks.Our estimations yield the following stylized facts.Generally, consistent with theoretical predictions, the long run effects of positive idiosyncratic (country-specific) productivity shocks on the current account are significantly negative.Further, permanent global shocks are impotent (by theoretical restriction) in explaining fluctuations in the current account though very significant in explaining investment fluctuations.current account;stochastic processes;capital movements

Unanticipated money and the demand for foreign assets : a rational expectations approach

This paper is an attempt at empirically investigating one of the building blocks of the foreign exchange market - the demand for foreign financial assets - under two alternative monetary policy rules (the fixed rate of growth of money rule and the feedback monetary policy rule) using time series data for Germany over the period 1974:1 - 1992:4. The approach adopted here offers us the opportunity of investigating the impact of monetary policy shocks on the demand for foreign assets. It turns out that the data-set picks the feedback monetary policy rule as characterising the data generation process better. Based on this feedback policy rule roughly 23% of monetary policy shocks have permanent effects (and the remaining percentage of these shocks exhibit transitory effects) on the demand for foreign assets. Our empirical results indicate, among others, that unanticipated monetary policy shocks and increases in the interest rate differential drive German investors abroad whereas domestic interest rate increases and currency depreciations demonstrate the "safe-haven" effect (that is to say domestic investors prefer having their investments in assets denominated in Deutsche Marks).

The Effect of Monetary Policy on Exchange Rates:How to Solve the Puzzles

Recent empirical research on the effects of monetary policy shocks on exchange rate fluctuations have encountered the exchange rate puzzle and th e forward discount bias puzzle.The exchange rate puzzle is the tendency of the domestic currency (of non-US G-7 countries) to depreciate against the US dollar following domestic monetary tightening.Forward discount bias puzzle is the failure of empirical research to find results consistent with the requirement that if uncovered interest parity holds then domestic monetary tightening (given that foreign monetary policy remains put) should be associated with an initial impact appreciation of the domestic currency followed by a gradual depreciation. This paper takes the current debate in the monetary policy literature on the measurement of monetary policy shocks a step further into international finance. The main objective here is to assess the relative performance of monetary policy identification schemes in helping solve (or generate) the puzzles mentioned above.The identification schemes considered include a fully recursive identification scheme, a semi-recursive identification scheme and a structural VAR model that explicitly incorporates international monetary policy interdependence into the identification of monetary policy shocks.The structural VAR identification scheme yields very plausible contemporaneous and dynamic estimates of the effects of monetary policy shocks on bilateral exchange rates for the data-set of the respective countries considered; and the puzzles largely disappear.

The Effect of Monetary Policy on Exchange Rates: How to Solve the Puzzles

Recent empirical research on the effects of monetary policy shocks on exchange rate fluctuations have encountered the exchange rate puzzle and th e forward discount bias puzzle.The exchange rate puzzle is the tendency of the domestic currency (of non-US G-7 countries) to depreciate against the US dollar following domestic monetary tightening.Forward discount bias puzzle is the failure of empirical research to find results consistent with the requirement that if uncovered interest parity holds then domestic monetary tightening (given that foreign monetary policy remains put) should be associated with an initial impact appreciation of the domestic currency followed by a gradual depreciation. This paper takes the current debate in the monetary policy literature on the measurement of monetary policy shocks a step further into international finance. The main objective here is to assess the relative performance of monetary policy identification schemes in helping solve (or generate) the puzzles mentioned above.The identification schemes considered include a fully recursive identification scheme, a semi-recursive identification scheme and a structural VAR model that explicitly incorporates international monetary policy interdependence into the identification of monetary policy shocks.The structural VAR identification scheme yields very plausible contemporaneous and dynamic estimates of the effects of monetary policy shocks on bilateral exchange rates for the data-set of the respective countries considered; and the puzzles largely disappear.monetary policy;exchange rate

Common Stochastic Trends in the Current Account

Solow residuals are used as proxies for productivity shocks in many empirical studies.Considering the shortcomings of this approach this paper proposes the common trends approach as an alternative.The common trends econometric technique is utilized here in an attempt to identify and analyze the long run effects of country-specific and global productivity shocks on fluctuations in investment and the current account.The theoretical framework utilized provides long run restrictions relevant for identifying global and country-specific productivity shocks.Our estimations yield the following stylized facts.Generally, consistent with theoretical predictions, the long run effects of positive idiosyncratic (country-specific) productivity shocks on the current account are significantly negative.Further, permanent global shocks are impotent (by theoretical restriction) in explaining fluctuations in the current account though very significant in explaining investment fluctuations.

Evaluation Of Alternative Water Resources For Cape Coast And Its Environs In Ghana

Cape Coast once a national capital of Ghana and its environs in recent years have constantly suffered perennial acute water shortage. The Brimsu dam which takes its supplies from the Kakum River with current production capacity of 1.4 × 104 m3/day cannot meet the water needs of the study area. The operating levels of the dam during crisis have reduced from 7.3 meters to 4.7 meters over the years with subsequent reduction in water production by 35%. Recently, the operating level has reduced further to about 3.5 meters with 60% reduction in water supply. This study evaluated alternative water resources to augment water supply and mitigate the impact of perennial water shortage. Among the alternatives considered are surface water from Twifo Prasso on the Pra River, groundwater supplies, and the desalination technology. Mean annual streamflow of Pra River at Twifo Prasso was used to evaluate the continuous availability and reliance on surface water. Hydrogeological assessment of geology underlying the study area vis-à-vis the existing borehole and their yields was used to evaluate groundwater potential. Desalination technology which is not currently in existence in the study area was considered based on available literature. Since the implementation of projects of this magnitude are the responsibilities of the central government through grants and loans, the study focuses on the cost implications of water from these alternatives to the final consumer in terms of affordability. In considering the cost of water from the various alternatives to per capita per day consumption in rural and urban settlements within the study area for a household of five, the cost of surface water remains the most affordable means of water supply, followed by groundwater. Borehole yields indicate that intensive exploitation of groundwater even though more expensive than surface water sources could minimize the effect of perennial water shortage and over dependence on surface water. The cost comparison analyses have shown that the cost of desalination using reverse osmosis is still expensive and could not compare favorably with the existing water supply alternatives. The analyses have thus confirmed the long held perception that desalination is expensive and cannot be used in study area

The Use of Religion in Violent Conflict, Conflict Resolution, and Peacebuilding: Cases from Uganda and Sierra Leone

Noted as one of the most notorious rebels in Africa, The Lord’s Resistance Army has been known to commit inexcusable atrocities in Uganda, raiding villages to kill, kidnap, and loot. Since 1989, Uganda has been in a state of constant conflict because of the activities of the LRA. In this study I identify the political milieu which fomented political unrest in Uganda and neighboring Sudan, leading to the emergence of the LRA. Additionally, I examine the operations of the LRA, while uncovering the spiritual order it professed and also weaponized it its campaign of violence. After Sierra Leone’s 11-year civil war, the country is attempting to reconstruct what was lost to the war through approaches such as Pentecostalism, reconciliation, and reparations. I delve into the antecedents of the war and the different types of peace attainable by a nation. I dwell on the use of religion in these approaches, and the efforts made by the many religious leaders and practitioners to promote peace. In exploring this case study, the dominant methodology used was library research, with information gathered from documentaries, books, and scholarly articles on religion, violence, the LRA, RUF, and the Sierra Leone civil war, mainly from the fields of Political Science, African Studies, Peace studies, and Religion. I conclude that the LRA, instead of being considered an unorganized group of bandits perpetrating violence, using the goal of enforcing God’s commandments as a guise, was rather an organized group with some military training and governed with strict rules. Its emergence was necessitated by the state of political affairs in Uganda. Additionally, I gather that although several peace approaches used in Sierra Leone contributed to the peace it is currently enjoying, transformative approaches were much more engaged- and preferred- in fostering peace. These approaches are widely accepted by the masses, and yield significant results as opposed to less transformative approaches like trials

The Security Challenges of Drug Trafficking in West Africa: Why Agenda-Setting Matters

Reproduced with permission of the editor. Available at http://www.africa-upeace.org/images/pdfs/Publications/PEACEBUILDING.pd

Examining the Dynamics of Policy Change and U.S. Narcotics Policy: Implications for the Global Narcotics Regime

The prohibition approach to narcotics control has been the dominant policy paradigm of the United States (US) and the global narcotics regime under the United Nations (UN) for more than a century. In recent years, however, key questions have been raised on the existing prohibition policy approach, which many consider as ineffective and unchanging from a broader perspective. It is based on this appearance of unchanging policy that this study seeks to investigate whether the US narcotics policy is undergoing any type of change or not. The study also seeks to explore the implications of US narcotics policy change on the global narcotics regime. It draws on three domestic policy theories: agenda-setting, partisan ideology, and policy paradigm theory (orders of change) to examine the dynamics of US narcotics policy change since 1993. The research study employs these theories as competing explanations and concludes that the narcotics policy process has largely undergone Hall\u27s (1993) conceptual second order change in policy. In essence, Hall\u27s (1993) theoretical concept of policy paradigm theory (orders of change) offers a persuasive explanation for the changing nature of the US narcotics policy. For the global implications of US policy change, the study finds that the US is more likely to influence and shape similar policy changes on the global narcotics regime because of its dominant influence on the regime