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Spillovers From the Rest of the World Into Sub-Saharan African Countries

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  • International Monetary Fund

Abstract

This paper investigates the impact of a global slowdown on individual African countries using a series of dynamic panel regressions for countries in the region, relating real growth in domestic output to world growth in trade weighted by partner countries and several control variables: oil prices, non-oil prices, financial variables, and country fixed effects. Estimates are then applied to prepare country-specific simulations. The model, which is shown to estimate well out-of-sample spillover effects in the region, shows that countries in the region are significantly affected by lower external demand for their exports, declines in commodity prices and the terms of trade, and tighter financial conditions abroad. The last, proxied by the spread of three-month Libor to US treasury bills, is to our knowledge one of the first applications of such a measure of financial conditions for countries in the region.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/155.

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Length: 20
Date of creation: 01 Jul 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/155

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Related research

Keywords: Commodity prices; Economic growth; Economic models; External shocks; Oil prices; Terms of trade; world growth; gdp growth; growth rate; real gdp; trading partners; partner countries; trading partner; export prices; terms of trade shocks; oil exporters; growth rates; trade shocks; trade changes; political economy; gdp growth rate; world markets; oil imports; idiosyncratic shocks; price of imports; growth model; world economy; trade effects; gdp per capita; oil importers; trade partner; exchange rate regime; idiosyncratic factors; trade shock; commodity trade; net exports; business cycle; terms of trade effects; economic integration; business cycles;

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References

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  1. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
  2. Inci Ötker & Karl Driessen & Zsófia Ãrvai, 2009. "Regional Financial Interlinkages and Financial Contagion within Europe," IMF Working Papers 09/6, International Monetary Fund.
  3. Jorge A. Chan-Lau & Srobona Mitra & Li L. Ong, 2007. "Contagion Risk in the International Banking System and Implications for London As a Global Financial Center," IMF Working Papers 07/74, International Monetary Fund.
  4. Tamim Bayoumi & Andrew Swiston, 2007. "Foreign Entanglements," IMF Working Papers 07/182, International Monetary Fund.
  5. Angus Deaton, 1999. "Commodity Prices and Growth in Africa," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 23-40, Summer.
  6. Andrew Berg & Jonathan D. Ostry & Jeromin Zettelmeyer, 2011. "What makes growth sustained?," Working Papers 133, European Bank for Reconstruction and Development, Office of the Chief Economist.
  7. Jeromin Zettelmeyer & Pär Österholm, 2007. "The Effect of External Conditionson Growth in Latin America," IMF Working Papers 07/176, International Monetary Fund.
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Citations

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Cited by:
  1. Chris Papageorgiou & Andrew Berg & Catherine A. Pattillo & Nicola Spatafora, 2010. "The End of An Era? the Medium- and Long-Term Effects of the Global Crisison Growth in Low-Income Countries," IMF Working Papers 10/205, International Monetary Fund.
  2. Era Dabla-Norris & Raphael A. Espinoza & Sarwat Jahan, 2012. "Spillovers to Low-Income Countries," IMF Working Papers 12/49, International Monetary Fund.
  3. Porzecanski, Arturo C., 2009. "Latin America: The Missing Financial Crisis," MPRA Paper 18780, University Library of Munich, Germany.
  4. SENBETA, Sisay Regassa, 2012. "How important are external shocks in explaining growth in Sub-Saharan Africa? Evidence from a Bayesian VAR," Working Papers 2012010, University of Antwerp, Faculty of Applied Economics.
  5. Olessia Korbut & Gonzalo Salinas & Cheikh A. Gueye, 2011. "Growth in Africa Under Peace and Market Reforms," IMF Working Papers 11/40, International Monetary Fund.
  6. Mthuli Ncube & Zuzana Brixiova & Meng Qingwei, 2014. "Working Paper 198 - Can Intra-Regional Trade Act as a Global Shock Absorber in Africa?," Working Paper Series 2104, African Development Bank.
  7. Mthuli Ncube & Zuzana Brixiova & Qingwei Meng, 2014. "Can Intra-Regional Trade Act as a Global Shock Absorber in Africa?," William Davidson Institute Working Papers Series wp1073, William Davidson Institute at the University of Michigan.
  8. Montfort Mlachila & Tidiane Kinda, 2011. "The Quest for Higher Growth in the WAEMU Region," IMF Working Papers 11/174, International Monetary Fund.
  9. Jorge Iván Canales Kriljenko & Farayi Gwenhamo & Saji Thomas, 2013. "Inward and Outward Spillovers in the SACU Area," IMF Working Papers 13/31, International Monetary Fund.
  10. Era Dabla-Norris & Raphael Espinoza & Sarwat Jahan, 2012. "Spillovers to Low-Income Countries: Importance of systemic emerging markets," OxCarre Working Papers 082, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  11. Chris Papageorgiou & Hans Weisfeld & Catherine A. Pattillo & Martin Schindler & Nicola Spatafora & Andrew Berg, 2011. "Global Shocks and their Impacton Low-Income Countries," IMF Working Papers 11/27, International Monetary Fund.
  12. Hostland, Douglas & Giugale, Marcelo M., 2013. "Africa's macroeconomic story," Policy Research Working Paper Series 6635, The World Bank.

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