Output Collapse, Growth and Volatility in Sub-Saharan Africa: A Regime-Switching Approach
A Markov-switching model with time-varying transition probabilities is applied to sub- Saharan African data to examine the link between output collapses and growth. In the model, the growth rate moves discretely between two regimes; one characterised by a stable positive average growth rate, and a collapse regime characterised by negative and volatile growth rate. The aim is to derive plausible estimates of the transition probabilities for the Markov chain component. These estimates are then included in a vector of time-varying country-specific variables for the Markov-switching estimation. The results show that the probability of an economy remaining in a stable growth regime increases with institutional quality, education, improving terms of trade and increased concentration on manufacturing industries. The analysis takes into account the fact that the dynamics of output following a large collapse differs significantly from the dynamics of output during more stable time periods by taking a non-linear approach.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Frederick van der Ploeg & Steven Poelhekke, 2009. "Volatility and the natural resource curse," Oxford Economic Papers, Oxford University Press, vol. 61(4), pages 727-760, October.
- Jesús Crespo Cuaresma & Julia Wörz, 2005.
"On Export Composition and Growth,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 33-49, April.
- Patricia Alvarez-Plata & Mechthild Schrooten, 2006.
"The Argentinean Currency Crisis: A Markov-Switching Model Estimation,"
The Developing Economies,
Institute of Developing Economies, vol. 44(1), pages 79-91.
- Patricia Alvarez-Plata & Mechthild Schrooten, 2003. "The Argentinean Currency Crisis: A Markov-Switching Model Estimation," Discussion Papers of DIW Berlin 348, DIW Berlin, German Institute for Economic Research.
When requesting a correction, please mention this item's handle: RePEc:eso:journl:v:41:y:2010:i:1:p:21-41. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Frank Walsh)
If references are entirely missing, you can add them using this form.