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Macroeconomic shocks and fluctuations in African economies

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  • Rasaki, Mutiu Gbade
  • Malikane, Christopher

Abstract

We estimate a monetary DSGE model to examine the role of macroeconomic shocks in generating fluctuations in ten African countries. The model is estimated with the Bayesian technique using twelve macroeconomic variables. The findings indicate that both the internal and external shocks significantly influence output fluctuations in African economies. Over a four quarter horizon, internal shocks are dominant and over eight to sixteen quarter horizons, external shocks are dominant. Among the external shocks, external debt, exchange rate, foreign interest rate and commodity price shocks account for a large part of output variations in African economies. Money supply and productivity shocks are the most important internal shocks contributing to output fluctuations in African countries.

Suggested Citation

  • Rasaki, Mutiu Gbade & Malikane, Christopher, 2015. "Macroeconomic shocks and fluctuations in African economies," Economic Systems, Elsevier, vol. 39(4), pages 675-696.
  • Handle: RePEc:eee:ecosys:v:39:y:2015:i:4:p:675-696
    DOI: 10.1016/j.ecosys.2015.02.002
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    1. repec:dug:journl:y:2017:i:2:p:145-158 is not listed on IDEAS
    2. repec:dug:actaec:y:2017:i:2:p:203-211 is not listed on IDEAS

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    Keywords

    Internal and external shocks; Dynamic stochastic general equilibrium; Bayesian technique; African economies;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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