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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
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    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

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