Sustainability and Genuine Saving: Empirical Evidence from Sudan Economy

Abstract

This paper assesses economic development path of Sudan during the period 1977 -2009 via genuine saving rate GSR, determines factors affect genuine saving, using vector autoregression. Genuine saving estimates were obtained from World Bank over the period 1977 to the referendum on South Sudan succession in 2009. Results show that the past values of manufacturing share to GDP, GSR lagged once, and growth rate GR have positive effects on GSR, contrary to GSR lagged twice, and import duty rate values IDR. Almost half the period Sudan suffers from dis-saving, affecting adversely well-being and sustainability. Dutch disease DD is apparent since the export of oil in the last quarter 1999.

Impact of Monetary Policy and its Transmission Mechanism in Sudan

“…Then we started the analysis by building reduced form VAR, to determine the optimum lags, then apply the VAR order selection criteria test, and obtained the following result. * indicates lag order selected by the criterion Table (6) shows that the lags order 2 & 3 were chosen by lag order determination criteria, then to judge which lag to be chosen we need to check the residual autocorrelation test. The Impulse Response Analysis:…”

“…Figure (5) analyses the estimated impulse response to a one percent increase in money supply shocks, 1% increase in money supply has a positive impact on itself by 3%, and the impact dropped quickly and return to its steady state after two months, the responses of the CPI increase immediately and reach its peak at 2% after two months then it dropped quickly and become insignificant after three months. The responses of the exchange rate to money supply shocks increase immediately by 6% and dropped quickly to return to its steady after 3 months.…”

“…Figure (6) analyses the estimated impulse response to a one percent increase in nominal exchange rate shocks, 1% increase in the nominal exchange rate has a positive impact on itself by 0.08 basis points, and the exchange rate depreciated by that amount, the impact dropped quickly and return to its steady state after three months, the responses of the CPI that is the inflation and money supply dropped by -0.01 basis points, and it takes longer time horizon to return to its steady state. Similarly, the reserve money and the output behave in the same manner.…”