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Does regional currency integration ameliorate global macroeconomic shocks in sub-Saharan Africa? The case of the 2008-2009 global financial crisis

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Listed author(s):
  • Gregory N. Price
  • Juliet U. Elu
Registered author(s):

    Abstract

    Purpose - – The purpose of this paper is to consider whether regional currency integration in sub-Saharan Africa ameliorates global macroeconomic shocks by considering the impact of the 2008-2009 global financial crisis on economic growth. This suggests that Central Africa Franc Zone (CFAZ) eurocurrency union membership amplifies the effects of global business cycles in sub-Saharan Africa. Design/methodology/approach - – The authors estimate the parameters of a quantity theory model of economic growth within a Generalized Estimating Equation (GEE) Framework. Findings - – Parameter estimates from GEE specifications reveal that the contraction in credit during the financial crisis of 2008-2009 had larger adverse growth effects on sub-Saharan African countries who were members of the CFAZ eurocurrency union. The authors also find that sub-Saharan African countries who were members of the CFAZ eurocurrency union were more likely to experience a contraction in credit. Originality/value - – As far as the authors can discern, no existing empirical growth models use a GEE framework to estimate parameters of interest. The GEE parameter estimates are distribution-free, robust with respect to unknown forms of heteroskedasticity, and control for a wide variety of error structures that can induce bias in panel data parameter estimates.

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    File URL: http://www.emeraldinsight.com/10.1108/JES-08-2011-0092?utm_campaign=RePEc&WT.mc_id=RePEc
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    Article provided by Emerald Group Publishing in its journal Journal of Economic Studies.

    Volume (Year): 41 (2014)
    Issue (Month): 5 (September)
    Pages: 737-750

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    Handle: RePEc:eme:jespps:v:41:y:2014:i:5:p:737-750
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    Keywords: Financial crisis; Economic growth; sub-Saharan Africa; Currency unions; CFAZ eurocurrency union; Contraction of credit;

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    Cited by:

    1. Asongu Simplice & Nwachukwu Jacinta, 2017. "Globalization and Inclusive Human Development in Africa," Man and the Economy, De Gruyter, vol. 4(1), pages 1-24, June.
    2. Asongu, Simplice A., 2017. "Assessing marginal, threshold, and net effects of financial globalisation on financial development in Africa," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 103-114.
    3. Simplice A Asongu & Lieven De Moor, 2017. "Financial Globalisation Dynamic Thresholds for Financial Development: Evidence from Africa," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 29(1), pages 192-212, January.
    4. Asongu, Simplice & Efobi, Uchenna & Tanankem, Belmondo, 2017. "On the Relationship between Globalisation and the Economic Participation of Women in Sub-Saharan Africa," MPRA Paper 78860, University Library of Munich, Germany.
    5. Asongu, Simplice A. & Koomson, Isaac & Tchamyou, Vanessa S., 2017. "Financial globalisation uncertainty/instability is good for financial development," Research in International Business and Finance, Elsevier, vol. 41(C), pages 280-291.

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