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Macroeconomic Volatility, Trade and Financial Liberalization in Africa

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  • Ahmed, Abdullahi D.
  • Suardi, Sandy

Abstract

Summary This paper examines the effects of financial and trade liberalization on growth volatility of real output and consumption in Africa. Our results suggest trade liberalization is associated with greater output and consumption growth volatility while financial liberalization increases the efficacy of consumption smoothing and stabilizes income and consumption growth. In addition, we find financial market depth and institutional quality operate jointly with trade and financial openness to reduce volatility in output and consumption growth. There is also evidence that good institutions which foster low inflation levels and volatility promote consumption and output growth stability.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 37 (2009)
Issue (Month): 10 (October)
Pages: 1623-1636

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Handle: RePEc:eee:wdevel:v:37:y:2009:i:10:p:1623-1636

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Web page: http://www.elsevier.com/locate/worlddev

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Keywords: macroeconomic volatility trade and financial liberalization Sub-Saharan Africa Bostwana financial development institutions;

References

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Cited by:
  1. Christian EBEKE & Jean-Louis COMBES, 2010. "Remittances and Household Consumption Instability in Developing Countries," Working Papers 201015, CERDI.
  2. Eller, Markus & Fidrmuc, Jarko & Fungácová , Zuzana, 2013. "Fiscal policy and regional output volatility: Evidence from Russia," BOFIT Discussion Papers 13/2013, Bank of Finland, Institute for Economies in Transition.
  3. Naoussi, Claude Francis & Tripier, Fabien, 2013. "Trend shocks and economic development," Journal of Development Economics, Elsevier, vol. 103(C), pages 29-42.
  4. Ang, James B., 2011. "Finance and consumption volatility: Evidence from India," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 947-964, October.

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