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A PANIC Attack on Inflation and Unemployment in Africa: Analysis of Persistence and Convergence

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  • DO ANGO, Simplicio
  • AMBA OYON, Claude Marius

Abstract

The purpose of the study is to analyze the nature of inflation and unemployment rates -in Africa and its regions- allowing cross-sectional dependence among their countries. The paper contributes to the literature assessing the stochastic properties of unemployment and inflation using the recently developed and more powerful panel unit root tests namely PANIC -Panel Analysis of Non-stationarity in Idiosyncratic and Common Component- from Bay and Ng (2010). To check the robustness of our finding we added Pesaran (2007) and Chang (2002). In our analysis, many PANIC tests clearly show that the validation of the hysteresis hypothesis for unemployment rates in Central Africa, East Africa and North Africa; and convergence of inflation in Africa and its regions

Suggested Citation

  • DO ANGO, Simplicio & AMBA OYON, Claude Marius, 2016. "A PANIC Attack on Inflation and Unemployment in Africa: Analysis of Persistence and Convergence," MPRA Paper 79685, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:79685
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    References listed on IDEAS

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    Keywords

    Panel unit root tests; PANIC; Unemployment; Inflation; African countries;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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