Growth Volatility and Openness in Sub-Saharan Africa

Mekonnen, Jemberu Lulie; Doğruel, A. Suut

doi:10.24954/mjecon.2017.11

Cited by 4 publications

(2 citation statements)

References 34 publications

(59 reference statements)

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“…The results also show that the patterns of output volatility are different across countries. Mekonnen and Dogreul, (2017) empirically assessed the impact of openness on growth volatility in 29 Sub-Saharan African countries. Using data from 1981 to 2010 and system GMM method their results showed that both trade and financial openness significantly reduce growth volatility in Sub-Saharan Africa.…”

Section: Literature Reviewmentioning

confidence: 99%

Sectoral output Volatility and Economic growth in Ethiopia

Degu¹

2020

Preprint

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In this study we examined the determinants of economic growth, and the effect of sectoral output volatility on economic growth of Ethiopia using national bank of Ethiopia (NBE) and the World Bank (WB) time series data ranging from 1981 to 2018. We included capital stock, working age population, trade balance and, sectoral output volatility as an explanatory variable. The sectoral output volatility was computed using Exponential General Autoregressive Conditional Heteroscedasticity (EGARCH) technique. Estimating three different ARDL models, we found long run relationship between economic growth and explanatory variables. From the long run ARDL model economic growth was positively and statistically significantly affected by capital stock—both in the long run and in the short run. In the long run trade balance (which has been negative throughout the study period) was found to have negative and statistically significant effect on economic growth. In the long-run volatility of industrial and service sector output growth was found to have negative and statistically significant effect on economic growth of Ethiopia. However, the study proved that the working age of population had no statistically significant effect on economic growth of Ethiopia. As the economy exhibits structural transformation from the agricultural to modern sectors the relative significance of sectors also change. In recent years the role of agriculture to Ethiopian economy, particularly in terms contribution to the national GDP has been declining—indicating the growing importance of service and industrial sectors. Therefore, smoothening and maintaining the positive sectoral output growth is advisable for the betterment of the economy. In addition, balancing the foreign trade, specially augmenting and diversifying of the export structure, and curbing of unrestricted importation of goods, is recommended as long as economic growth is concerned.

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Section: Literature Reviewmentioning

confidence: 99%

Sectoral output Volatility and Economic growth in Ethiopia

Degu¹

2020

Preprint

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“…More financially open countries experience greater reduction in growth volatility following equity market opening. Mekonnen and Dogruel (2017) investigate the effect of financial openness and trade openness on growth volatility in a sample of 29 sub-Saharan African countries in the period from 1981 to 2010 using the system GMM. The results show that both trade and financial openness lower growth volatility in the countries, though the effect of financial openness is not robust for alternative specifications.…”

Section: Financial Openness and Growth Volatilitymentioning

confidence: 99%

Trade and Financial Openness, and Output Growth Volatility: Evidence From Nigeria

Aigheyisi

Isikhuemen

2019

JHSSCA

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This study investigates the effect of trade openness and financial openness on output growth volatility in Nigeria using annual time series data that span the period from 1970 to 2015. Output growth volatility is generated using an EGARCH (1,1) process, and this was regressed on indices or measures of trade openness, financial openness (using the Chinn-Ito index), oil price, financial development and exchange rate. The autoregressive distributed lag (ARDL) approach to cointegration and error correction modeling was employed for the analysis. The empirical evidence indicates that trade openness and financial openness exacerbate output growth volatility in Nigeria in the long run. Favourable crude oil price is found to play significant role in stabilizing output growth in the long run. However, the short run effect of trade openness on growth volatility is negative, implying that in the short run trade openness plays some role in reducing output growth volatility. The short run effect of financial openness on output growth volatility is also negative, but not statistically significant. Further evidence from the study is that financial development and currency depreciation also reduce growth volatility in the short run. Based on the empirical evidence, the paper recommends, as measures to reduce output growth volatility (or stabilize output growth) in Nigeria, cautious liberalization of the nation’s economy, efforts by the government to develop the nation’s financial system to expand its credit extension/provision capacity, and prevention (by the monetary authority) using appropriate policy actions, of undue appreciation of the domestic currency (the naira).

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Output Growth Volatility, Remittances, and Financial Development in the Common Market for Eastern and Southern Africa Region: A System Generalized Method of Moments Approach

Mulugeta

2024

J Knowl Econ

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Growth Volatility and Openness in Sub-Saharan Africa

Cited by 4 publications

References 34 publications

Sectoral output Volatility and Economic growth in Ethiopia

Sectoral output Volatility and Economic growth in Ethiopia

Trade and Financial Openness, and Output Growth Volatility: Evidence From Nigeria

Output Growth Volatility, Remittances, and Financial Development in the Common Market for Eastern and Southern Africa Region: A System Generalized Method of Moments Approach

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