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Macroeconomic Volatility, Trade and Financial Liberalization in Africa

  • Ahmed, Abdullahi D.
  • Suardi, Sandy

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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