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Economic policy uncertainty, governance institutions and economic performance in Africa: are there regional differences?

Author

Listed:
  • Davidmac O. Ekeocha

    (University of Nigeria
    University of Liverpool Management School)

  • Jonathan E. Ogbuabor

    (University of Nigeria)

  • Oliver E. Ogbonna

    (University of Nigeria)

  • Anthony Orji

    (University of Nigeria)

Abstract

In recent years, the global economy has witnessed several uncertainty-inducing events. However, empirical evidence in Africa on the effects of economic policy uncertainty (EPU) on economic activities remains scanty. Besides, the moderating effect of governance institutions on the uncertainty-economic performance relationship in Africa and the likelihood of regional differences in the response of economic activities to EPU on the continent are yet to be investigated. To address these gaps, we applied system GMM and quantile regressions on a panel of forty-seven African countries from 2010 to 2019. We find that while global EPU and EPUs from China, USA and Canada exert considerable influence on economic performance in Africa, the effects of domestic EPU and EPUs from Europe, UK, Japan, and Russia were negligible, suggesting that African economies are resilient to these sources of uncertainty shocks. We also find that governance institutions in Africa are not significantly moderating the uncertainty-economic performance relationship. However, our results highlighted regional differences in the response of economic activities to uncertainty, such that when compared to East and West Africa, economic performance in Central, North and Southern Africa is generally more resilient to global EPU and EPUs from China, USA, Europe and UK. We highlighted the policy implications of these findings.

Suggested Citation

  • Davidmac O. Ekeocha & Jonathan E. Ogbuabor & Oliver E. Ogbonna & Anthony Orji, 2023. "Economic policy uncertainty, governance institutions and economic performance in Africa: are there regional differences?," Economic Change and Restructuring, Springer, vol. 56(3), pages 1367-1431, June.
  • Handle: RePEc:kap:ecopln:v:56:y:2023:i:3:d:10.1007_s10644-022-09472-7
    DOI: 10.1007/s10644-022-09472-7
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    More about this item

    Keywords

    Economic policy uncertainty; Governance institutions; Economic performance; System GMM regression; Quantile regression;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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