No abstract

Most developing countries are making frantic efforts to curtail illicit outflows of investible funds. Unfortunately, these efforts seem not to have produced the expected results. Meanwhile, existing empirical investigations have failed to explain emphatically, the channels through which this economic sabotage is being perpetuated. In this context, this study scrutinizes whether geopolitical risk factors (GPR) and economic policy uncertainty (EPU) stimulate the outflows of illicit capital from South Africa over 1985 – 2018 while controlling for the influence of national income, trade openness, foreign direct investments (FDI) and population. Preliminary investigations confirmed co-integration among the series. Furthermore, it is established that capital flight is a systemic problem considering its significant short-run autoregressive effect. Further evidence from the ARDL model indicates that GPR and EPU exert significant positive impacts on capital flight only within the short-run, whereas FDI produces a positive and significant influence on capital outflows at all times. The influence of FDI on illicit capital outflow is also consistent when the Kernel Regularised Least Squares (KRLS) model was applied, such that its positive and significant influence was also observed both on the average and across all quantiles of the distributions of capital migrations. Therefore, to curtail capital flight, policymakers must keep an eye on the inflows and outflows of FDI. Meanwhile, GPR and EPU are not long-term predictors of capital migrations from South Africa. The findings of this investigation could be equally beneficial to other countries battling with capital flight.

The study examines empirically the relationship between fiscal deficits and macroeconomic stability in Nigeria from 1970 to 2016. The data for the empirical analysis was sourced from secondary sources such as the CBN statistical bulletin. The study used Inflation Rate (INFL) and Exchange Rate (EXCR) to proxy macroeconomic stability whereas Overall Fiscal Deficits (OFDE), fiscal deficit financed by Domestic Borrowing (DBFD), fiscal deficit financed by External Borrowing (EBFD), Interest Rate (INTR), Money Supply (MS), Foreign Direct Investment (FDI) and External Reserve Balance (EXTR) are used as the endogenous variables. The study employed descriptive statistics, unit root test, cointegration and VAR estimation methods to analyze the data. The results of the variance decomposition reveal that Interest rate (INTR), overall fiscal deficits (OFDE) and the size of fiscal deficits financed by domestic borrowing (DBFD) are the main shocks causing the variation in inflation (INFL), while overall fiscal deficits (OFDE), the size of fiscal deficits financed by external borrowing (EBFD) and the size of fiscal deficits financed by domestic borrowing (DBFD) are the main shocks causing the variation in exchange rate (EXCR) in Nigeria. The study concludes that fiscal deficits have significant negative impact on macroeconomic stability visa -viz inflation and exchange rates in Nigeria. The study recommends that fiscal deficits should be moderated and financed chiefly through bonds as empirical finding suggests that both domestic and external borrowing options are detrimental to the macroeconomic stability on the Nigerian economy.

A critical evaluation of prior studies indicates that the roles of structural and institutional transformations in moderating natural resource-inequality dynamics is understudied. Moreover, very little is known about such dynamics in resource-rich sub-Saharan African (SSA) countries. To cover the literature gaps, this study harnesses annual panel datasets comprising natural resource rent, structural transformation, institutional quality and technology for the top 10 resource-rich SSA countries over 2000–2018 for empirical evaluations. After ascertaining long-run coevolution among the series, the estimates of the panel quantile regression depict that natural resource abundance is the leading cause of income disparities in these countries; hence, it promotes inequality significantly across all quantiles of the distributions. Furthermore, at the 5th quantile, both structural and institutional transformations deaccelerate inequality insignificantly, but at the 10th quantile, institutional reforms engender equitable income distributions. Notably, beyond the 10th and 50th quantiles, institutional and structural reforms significantly promote income disparities. Additionally, at the 10th quantile, technology marginally promotes equitable income distributions, but at the 60th, 70th and 80th quantiles, technology significantly promotes inequality. Implicatively, a blend of structural reforms and technological improvements within the thresholds around 10th and 50th quantiles could ensure equitable prosperities in the region. Among other policy options highlighted herein, pro-equity redistributive policies that ensure no one is left behind are expedient to eliminate income disparities in these countries.

This study investigated possible causal relationships between fiscal deficit and exchange rate in Nigeria. The study adopted the vector autoregression (VAR) econometric technique to analyze the time series data obtained from the Central Bank of Nigeria and other sources. The study amongst other findings, found long run relationship between exchange rate and fiscal deficit, irrespective of how the deficit is financed. The study also found joint causality running from fiscal deficit to exchange rate with feedback. Also joint causality was found running from exchange rate to both the size of deficit finance through domestic and external borrowings, but without any feedback. Consequently, the variation in exchange rate are chiefly from both overall fiscal deficit financed through external and domestic borrowings. The study concluded that, fiscal deficit irrespective of how it is financed has significant negative effect on exchange rate in Nigeria and has contributed in worsening exchange rate volatility in Nigeria. The study recommends that the fiscal deficit should be scarcely deployed and moderated as a fiscal policy tool, as this causes shock and instability in price levels in general and exchange rate in particular.