Identifying terms of trade shocks in a developing country using a sign restrictions approach

Output, Employment, and Price Effects of U.S. Narrative Tax Changes: A Factor-Augmented Vector Autoregression Approach

“…The reliability of the identification of tax cut shocks in the FAVAR model is examined using the Median-Target (M-T) approach proposed by Fry and Pagan (2011). There are two advantages of the M-T method, as mentioned by Furlanetto, Ravazzolo, and Sarferaz (2019), Mangadi and Sheen (2017), and Ouliaris, Pagan, and Restrepo (2015). First, this method tests the significance of the model identification by minimizing the sum of the standardized gap between the impulse responses of sign restricted FAVAR model and the impulse responses drawn from the M-T test rotation.…”

Trade shocks and labour market resilience in Sub-Saharan Africa: Does the franc zone response differently?

“…TOT shocks tend to have persistent and volatile effects on macroeconomic variables such as output growth, exchange rates, inflation, real income and savings (see Mendoza, 1995;Broda, 2004;Cashin and Pattillo, 2006;Kose and Riezman, 2013;Coudert et al, 2015;Avom et al, 2021). Such variability are not only liable to business cycle uncertainties, economic performances and growth can equally be greatly affected (Loayza and Raddatz, 2007;Mangadi and Sheen, 2017). This is particularly interesting to see mainly because less developed and transition countries compete with each other for demand in developed economies, and these countries produce at higher labour intensity than developed countries.…”