Labor mobility and business cycle synchronization in Southern Africa

This research analyses the threshold effects of fiscal policy on business cycle synchronisation in the Economic Community of West African States (ECOWAS). The main contribution is the analysis of the effects of respecting versus not respecting deficit and debt thresholds on the synchronisation of business cycles through the creation of binary variables. The study covers the period 1990–2020 and fourteen ECOWAS countries. The results show that the optimal pro-growth thresholds for the budget deficit and debt are 5.559% and 45.61% of GDP, respectively. Furthermore, spatial analysis reveals significant positive spatial spillover effects of respecting these thresholds on synchronising business cycles within ECOWAS. The current convergence criterion of −3% for the budget balance is favourable for growth and business cycle convergence. In addition, the current debt convergence criterion of 70% of GDP could be adjusted. Our results suggest the need to strengthen revenue mobilisation, harmonise taxation and improve the monitoring of fiscal standards.

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Examining the impact of intra-industry trade on business cycle alignment within the ECOWAS

Diendere,

Eggoh

2024

IJDI

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Purpose This paper aims to examine the impact of intra-industry trade on business cycle synchronization within the Economic Community of West African States (ECOWAS). ECOWAS region is characterized by limited intracommunity trade and a low level of foreign direct investment. Design/methodology/approach First, this research uses the two-digit level harmonized system classification to measure intra-industry trade, which is straightforward to interpret and compute, making it suitable for countries with low trade intensity. Second, it uses the system generalized method of moments (system-GMM) to examine the dynamic relationship between variables and address endogeneity concerns. Findings The results obtained from the system-GMM estimation reveal a positive and significant correlation between intra-industry trade intensity and business cycle synchronization, as well as an inhibiting effect of economic freedom on the relationship between intra-industry trade and business cycle synchronization. These results highlight the need to implement policies aimed at reducing tariff barriers, improving financial integration and intensifying production. Originality/value This research analyze the link between intra-industry trade and business cycle synchronization within the ECOWAS. It also analyze the role of economic freedom on the link between intra-industry trade and business cycle synchronization.

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Labor mobility and business cycle synchronization in Southern Africa

Cited by 3 publications

References 94 publications

Digital transformation and rural labour force occupational mobility

Digital transformation and rural labour force occupational mobility

Threshold and Spatial Effects of Fiscal Policy on Business Cycle Synchronisation in the Economic Community of West African States

Examining the impact of intra-industry trade on business cycle alignment within the ECOWAS

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