The exchange rate system and macroeconomic fluctuations in Sub-Saharan Africa

Macroeconomic shocks and fluctuations in African economies

“…In addition, the similarity of shocks may be due to the fact that African countries generally have high external debt, rely heavily on the export of commodities and on imported intermediate inputs. The result is similar to the findings by Flood and Rose (1995) and Maćkowiak (2007) and differs from the findings by Sissoko and Dibooglu (2006) for African countries. Among internal shocks, we find that productivity shocks to be the most persistent in affecting output.…”

“…In contrast, Hoffmaister and Roldós (2001), and Raddatz (2007) find that terms of trade shocks have little impact in developing countries. In Africa, Hoffmaister et al (1997) and Sissoko and Dibooglu (2006) find that trade shocks have limited effects on output variations.…”

“…Kose and Riezman (2001) find that external shocks exert a dominant influence on output fluctuations in Africa. On the other hand, Hoffmaister et al (1997) and Sissoko and Dibooglu (2006) find that internal shocks largely explain output variations in Africa. Therefore understanding the relative importance of these shocks is crucial for sound macroeconomic management.…”

“…Cashin et al(2004) focus on the impact of commodity price shocks on the real exchange rate of commodity exporting countries. Hoffmaister et al(1997) and Sissoko and Dibooglu (2006) use VAR to examine the relative contributions of internal and external shocks to macroeconomic fluctuations in sub-Saharan African countries.…”

Sub-Saharan African Countries’ Dependence on the External Inflation: Empirical Evidence Using Copulas

“…Moreover, Fischer (1981), Smal (1998), Guerron-Quintana (2011) and Araú jo (2015) point that high CPI lead to the malfunctioning of several markets, reducing the level of social welfare in the form of income concentration, making the formation of expectations difficult, decreasing the level of investments, causing disturbances in the Balance of Payments, among other problems. Sissoko and Dibooglu (2006) argue that regimes with a less flexible exchange rate would be more vulnerable to external crises, given a less elastic reaction of the policy maker, in order to reduce the effects of external shocks, allowing the exchange rate to depreciate. Thus, the costs would be greater for countries more integrated, such as the case of economic blocs of the EMZ and the WAEMU, for example.…”