Government Policy, Foreign Direct Investment and Unemployment in Emerging Economies

The broad objective of this study is to determine how government policy influences FDI as well as how FDI affects the level of unemployment as a proportion of labour force in emerging economies. The techniques of analysis are a descriptive statistic and panel regression based on Ordinary Least Squares Method. Evidence from the descriptive analysis affirms that the variables of the study for each country exhibit contradictory behaviour in 1991-2016. In the same period, the big beneficiaries of the net inflow FDI are not experiencing the lowest unemployment rate. Panel regression results (2000-2015) suggest that net inflow of FDI has a negative influence on unemployment while government policy has no significant effect on the net inflow of FDI. The study concludes that a continuous inflow of net foreign investment is a good source of creating jobs in emerging economies. Due to the lack of influence of government policy on the net inflow of FDI, the study recommends that emerging economies should revise the regulation on the freedom to trade internationally so as to enhance the continuous flow of foreign direct investment.  &nbsp

Effects of Climate Change on the Long-run Crops’ Yields in Nigeria

The study investigated the impact of climate change on yields of leading food crops in Nigeria and assessed the transmission channels of climate shocks to welfare. Long-run causality test, Markov-switching regression and Structural Vector Autoregressive (SVAR) model were used. Long-run causality between climate change and crop yields was not rejected. A rise in temperature by 1% reduces crop yields by -0.12% in the regime of high yield while 1% increase in rainfall increases yields by 0.21% and 0.26%, respectively in high and low yield period. Shocks to welfare is traceable to climate change via crop yields and food prices effect

Uncertainty of Output Gap and Monetary policy Making in Nigeria

A major challenge of monetary policy is the attainment of sustainable output level but in setting the optimal monetary policy rate information of the output gap but how uncertainty of the gap affects the path of monetary policy rate is crucial for policy use. The investigation of this phenomenon in Nigeria was mostly concerned with how monetary policy affects output. In view of the dearth of studies on uncertainty and monetary policy in Nigeria, this paper investigates the effect of output gap uncertainty on monetary policy rate in Nigeria-1991Q1-2014Q4. The paper relies on the New Keynesian economics and employs the GARCH-GMM econometric technique for analyses. Evidence from the study shows that real output gap and inflation uncertainty are statistically significant with estimated values of        respectively. The coefficient of the real output variable is significant with a coefficient estimate of    while we found no strong evidence to support the effect of inflation on monetary policy rate.  The inference from our findings is that monetary policy is less responsive to uncertainty of real output gap. We therefore recommend that the Central Bank of Nigeria should consider uncertainty of both inflation and output variables when setting the policy rate.&nbsp

Do Financial and Trade Openness Lead to Financial Sector Development in Nigeria?

With so many countries of the world now open to global capital and trade, this study identifies whether financial and trade openness contribute to the development of Nigeria’s financial system by considering both financial depth and access to finance indicators. To achieve this objective, we applied the Simultaneous Openness Hypothesis as our theoretical framework and the Generalized Method of Moments (GMM) as our estimation method. Our findings reveal that opening trade while neglecting capital (vice versa) may be detrimental to the development of Nigeria financial system. In view of this evidence, we recommend that the simultaneous opening of trade and finance is a more guaranteed way of ensuring improved financial development in Nigeria

COVID-19: Putting stock markets back on recovery among the Crude Oil Producing Economies

COVID-19 poses an unprecedented threat to components of global business cycles including stock markets, industrial production and employment. This study investigated its impact on stock markets of 24 oil producing COVID-19-hit economies in North America, South America, Europe, Asia, Oceania and Africa. It examined the nature of asymmetry in the business cycles of the sampled countries and the impact of COVID-19 on the asymmetry. Switching regression techniques were estimated with data covering the period from October 1, 2019 to April 14, 2020. The results confirmed the presence of negative asymmetry in stock market cycles in 54.2% of the sampled countries, out of which 38.5%, 46.2% and 15.4% are high, middle and low-middle income countries, respectively. This is significantly connected to the COVID-19 pandemic for 29.2% of the sample. The expected duration of being in the state of low stock market performance, due to COVID-19, reduces with levels of countries' income, if regimes are dependent. Opposite was observed if regimes are independent. Hence, the negative impact of COVID-19 on stock markets in lower-income countries will linger compared to higher-income countries. Reducing COVID-19-associated risks will go a long way to revive investors' confidence in the market and help to restart the engine of economic recovery in the sampled countries

Uncertainty of stock market price behaviour and monetary policy: Evidence from Nigeria

This paper attempts to answer the question of how the uncertainty of stock price behaviour affected monetary policy decisions in Nigeria during the period 1991Q1- 2015Q4. Although studies have been conducted on how the stock market responds to monetary policy decisions there is a paucity of analysis on how stock prices and the uncertainty of stock prices affect monetary policy, especially in Nigeria. Data was obtained from the Central Bank of Nigeria statistical database. Both Generalised Autoregressive Conditional Heteroskedasticity modelling and Generalised Method of Moments estimation were used for analysis. Findings from the regression analysis reveal that stock prices, as well as their unpredictable behaviour, significantly affect monetary policy decisions during the period under study. Another interesting finding is that the pair of the uncertainty of real output and inflation also significantly affected the monetary policy rate and that the monetary authority was more responsive to this pair than that of inflation and stock prices. The recommendation based on our findings is that the Central Bank of Nigeria should incorporate the uncertainty of stock prices into the monetary policy model when determining the policy ratEste artículo trata de encontrar respuestas a la cuestión relativa a cómo las decisiones de política monetaria se ven afectadas por la incertidumbre sobre los precios de las acciones en el caso nigeriano (1991-2015). Aunque se han llevado a cabo algunos estudios sobre cómo responde el precio de las acciones a las decisiones de política monetaria, son muy escasos aquellos centrados en cómo los precios de los valores, y la incertidumbre sobre los mismos, afecta a las decisiones política monetaria (especialmente en Nigeria). Para dar respuesta a la anterior cuestión, se utiliza la información proporcionada por el Banco Central de Nigeria para llevar a cabo la estimación de modelos de heteroscedasticidad condicional autorregresiva, realizándose tales estimaciones con el método generalizado de los momentos. Los resultados obtenidos ponen de manifiesto que los precios de las acciones, así como su comportamiento impredecible, influyen significativamente en las decisiones de política monetaria que se tomaron en el periodo objeto de estudio. Otro resultado interesante es que la dupla “incertidumbre en la producción real e inflación” también afectó significativamente a la tasa de política monetaria, de tal manera que las autoridades monetarias fueron más sensibles a la dupla anterior que al par “incertidumbre en inflación y precios de los activos”. En base a las conclusiones obtenidas, se recomienda al Banco Central de Nigeria la inclusión de la incertidumbre en el precio de las acciones en su modelo de determinación de la tasa de política monetaria

Effects of Climate Change on the Long-run Crops’ Yields in Nigeria

The study investigated the impact of climate change on yields of leading food crops in Nigeria and assessed the transmission channels of climate shocks to welfare. Long-run causality test, Markov-switching regression and Structural Vector Autoregressive (SVAR) model were used. Long-run causality between climate change and crop yields was not rejected. A rise in temperature by 1% reduces crop yields by -0.12% in the regime of high yield while 1% increase in rainfall increases yields by 0.21% and 0.26%, respectively in high and low yield period. Shocks to welfare is traceable to climate change via crop yields and food prices effect

Financial integration and growth outcomes in Africa: Experience of the trade blocs

In this study, we examine the benefits of financial integrations in four of Africa regional trade blocs: COMESA, ECCAS, CEN-SAD and ECOWAS. We regress de-jure and de-facto indices of financial integration on growth outcome using the dynamic system generalised method of moment and pooled mean group estimation procedure. Findings revealed that total foreign asset and liabilities and foreign liabilities as a percentage of GDP are inversely related to growth outcomes in COMESA. In CEN-SAD, we found that foreign liabilities as a percentage of GDP hurts growth. In ECCAS, growth-financial integration relationship showed that foreign liabilities as a percentage of GDP inhibit real per capita GDP in the long run. In ECOWAS, foreign liabilities as a percentage of GDP is inversely related to real per capita GDP in the long run. Policy implications of our findings were discussed

Health Expenditure and Infant Mortality in Sub Saharan Africa: Evidence from Threshold Regression

This study aims to determine the impact of healthcare spending on infant mortality rates in 45 sub-Saharan African nations from 2000 to 2020. Utilizing threshold regression, it reveals that lower regime dependents exhibit a decrease in public health spending below a certain threshold, leading to a positive correlation between total public health expenditure and infant mortality rates. Conversely, external medical funding significantly reduces infant mortality in higher threshold regimes but not in lower threshold regimes. Private health expenditure negatively and significantly impacts both lower and higher income groups, placing undue pressure on residents. However, the study does not fully account for sociocultural factors influencing infant mortality in the region. The research highlights that direct healthcare costs in the region meet the minimum threshold for health expenditure and are inversely related to infant mortality rates