IDEAS home Printed from https://ideas.repec.org/a/cwk/ajocsl/2026-053.html

External Debt-Driven Unemployment, Exchange Rate Volatility, and Interest Rates: Hysteresis Effect Evidence from the Burundian Economy

Author

Listed:
  • NIZIGIYIMANA, Emmanuel

    (Ecole Nationale d'Administration (ENA))

  • BUREGEYA, Etienne
  • NDIKUMANA, Jean de Dieu

    (École Normale d'Administration)

Abstract

This study examines the determinants of unemployment in Burundi through a Vector Error Correction Model (VECM) incorporating the unemployment rate, exchange rate volatility, lending interest rate, their interaction term, and the stock of external debt over the period 1991–2025. The results reveal that external debt is the dominant structural determinant of long-term unemployment (t = -8.217), with a speed of adjustment significantly lower than that of debt (-0.020

Suggested Citation

  • NIZIGIYIMANA, Emmanuel & BUREGEYA, Etienne & NDIKUMANA, Jean de Dieu, 2026. "External Debt-Driven Unemployment, Exchange Rate Volatility, and Interest Rates: Hysteresis Effect Evidence from the Burundian Economy," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 7(4).
    • Handle: RePEc:cwk:ajocsl:2026-053
    DOI: 10.59413/ajocs/v7.i4.20
    as

    Download full text from publisher

    File URL: https://ijcsacademia.com/index.php/journal/article/view/673
    Download Restriction: no
    File URL: https://libkey.io/10.59413/ajocs/v7.i4.20?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jacob A. Frenkel & Assaf Razin, 1986. "Fiscal Policies and Real Exchange Rates in the World Economy," NBER Working Papers 2065, National Bureau of Economic Research, Inc.
    2. Ansgar Belke & Daniel Gros, 2001. "Real Impacts of Intra-European Exchange Rate Variability: A Case for EMU?," Open Economies Review, Springer, vol. 12(3), pages 231-264, July.
    3. Frenkel, Jacob A & Razin, Assaf, 1986. "Fiscal Policies in the World Economy," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 564-594, June.
    4. Charles Engel, 2016. "Exchange Rates, Interest Rates, and the Risk Premium," American Economic Review, American Economic Association, vol. 106(2), pages 436-474, February.
    5. Brambor, Thomas & Clark, William Roberts & Golder, Matt, 2006. "Understanding Interaction Models: Improving Empirical Analyses," Political Analysis, Cambridge University Press, vol. 14(1), pages 63-82, January.
    6. Hausmann, Ricardo & Panizza, Ugo & Stein, Ernesto, 2001. "Why do countries float the way they float?," Journal of Development Economics, Elsevier, vol. 66(2), pages 387-414, December.
    7. Mr. Douglas Laxton & Mr. Andrew Berg & Mr. Philippe D Karam, 2006. "A Practical Model-Based Approach to Monetary Policy Analysis—Overview," IMF Working Papers 2006/080, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicholas Sly & Caroline Weber, 2015. "Global tax policy and the synchronization of business cycles," Research Working Paper RWP 15-7, Federal Reserve Bank of Kansas City.
    2. Florian Morvillier, 2018. "On the impact of the launch of the euro on EMU macroeconomic vulnerability," EconomiX Working Papers 2018-51, University of Paris Nanterre, EconomiX.
    3. Andre Varella Mollick, 2016. "Adoption of the Gold Standard and Real Exchange Rates in the Core and Periphery, 1870–1913," International Finance, Wiley Blackwell, vol. 19(1), pages 89-107, April.
    4. Tselmuun Tserenkhuu & Stephen Kosempel, 2024. "Life expectancy and business cycles in a small open economy," ISER Discussion Paper 1263, Institute of Social and Economic Research, The University of Osaka.
    5. Karl FARMER & Jacopo ZOTTI, 2009. "Sustainable Government Debt in a Two-Country, Two-Good Overlapping Generations Model," EcoMod2009 21500030, EcoMod.
    6. David Alan Aschauer, 1990. "Finite Horizons, Intertemporal Substitution, and Fiscal Policy," Public Finance Review, , vol. 18(1), pages 77-91, January.
    7. Bernardin Akitoby, 1997. "Termes de l'échange endogène et cycles économiques réels : une application à la Côte-d'Ivoire," Revue Économique, Programme National Persée, vol. 48(6), pages 1485-1508.
    8. Dennis Wesselbaum, 2020. "Procyclical Debt as Automatic Stabilizer," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 18(1), pages 81-102, March.
    9. Makin, Anthony J. & Ratnasiri, Shyama, 2023. "New estimates of international capital mobility for select OECD economies," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 127-138.
    10. Nicholas Apergis & Costas Katrakilidis & Stamatis Papastamatis, 1997. ""Meteor showers" and "heat waves" in Greek financial markets," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 3(4), pages 364-375, November.
    11. Jung Young-Cheol & Quyen Nguyen V., 2012. "The Global Transmission of Government Debt," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-24, July.
    12. Peter R. Hartley & Albert S. Kyle, 1988. "Real Interest Rates and Home Goods: A Two‐Period Model," The Economic Record, The Economic Society of Australia, vol. 64(3), pages 168-177, September.
    13. Nicholas Sly & Caroline Weber, 2017. "Bilateral Tax Treaties and GDP Comovement," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 292-319, May.
    14. Florian Morvillier, 2018. "On the impact of the launch of the euro on EMU macroeconomic vulnerability," Working Papers hal-04141675, HAL.
    15. Jonathan D. Ostry, 1994. "Government Purchases and Relative Prices in a Two‐Country World," The Economic Record, The Economic Society of Australia, vol. 70(209), pages 149-161, June.
    16. Harry Huizinga & Søren Bo Nielsen, "undated". "Is Coordination of Fiscal Deficits Necessary?," EPRU Working Paper Series 98-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    17. Duran, Hasan Engin & Ferreira-Lopes, Alexandra, 2022. "The Revival Of The Feldstein-Horioka Puzzle And Moderation Of Capital Flows After The Global Financial Crisis (2008/09)," Research in International Business and Finance, Elsevier, vol. 60(C).
    18. Biswajit Maitra & Dhritiman Ganguli, 2024. "Fiscal policy and real exchange rate variations in India," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 14(3), pages 619-640, September.
    19. Karl Farmer, 2011. "Public-Debt Sustainability, Real Exchange Rate, and Country-Specific Saving Rates," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(1), pages 45-65, February.
    20. Germaschewski, Yin, 2020. "Stabilization policy, infrastructure investment, and welfare in a small open economy," Economic Modelling, Elsevier, vol. 84(C), pages 322-339.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cwk:ajocsl:2026-053. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Charles G. Kamau (email available below). General contact details of provider: https://ijcsacademia.com/index.php/journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.