4. Theses and Dissertations:

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REAL EXCHANGE RATE BEHAVIOUR IN TANZANIA
(University of Dar es Salaam, 2004-10-06) PANTALEO, INNOCENT M.
In this study the behaviour of Tanzania’s real exchange rate for the period 1966 to 2001 is examined through investigating the determinants of real exchange rate and its misalignment. The period was chosen to cover the years in which the Bank of Tanzania has been under operation. The study has employed econometric techniques of time series, with exchange rate misalignment analyzed using two approaches, the first one being use of the difference between actual real exchange rate and equilibrium real exchange rate and the second one using exchange rate premium as a proxy of misalignment. The results show that the long run determinants of real exchange rate in Tanzania include debt servicing, openness, terms of trade and reforms. The main hypothesis that periods of major external imbalance, foreign exchange control and fixed exchange rate regime are characterized with exchange rate misalignment which tend to disappear during the period of floating exchange rate regime was not rejected. Hence the conclusion that the period of major external imbalance, foreign exchange control and fixed exchange rate regime in Tanzania was characterized by exchange rate misalignment, which is disappearing during the period under which the economic reforms are being implemented. In addition, the results show that in the absence of other interventions, actual real exchange rate converge very slowly towards the long run equilibrium level. Hence, the study recommends the use of the nominal devaluation, in the short run as a powerful tool for reestablishing real exchange rate equilibrium.
TECHNICAL EFFICIENCY AND TOTAL FACTOR PRODUCTIVITY GROWTH IN UGANDA’S DISTRICT REFERRAL HOSPITALS
(UNIVERSITY OF DAR ES SALAAM, 2006-09-01) Yawe, Bruno Lule
The study measures the technical efficiency and total factor productivity growth of 25 district referral hospitals from three regions of Uganda over the 1999-2003 period. This study is motivated by a desire to evaluate the ongoing health sector reforms in Uganda which in part are seeking to improve the efficiency of health services. Nonparametric Data Envelopment Analysis (DEA) is used in the measurement of hospital technical efficiency whilst the DEA-Malmquist index is used in the measurement of hospital total factor productivity change. The Hospital Management Information System launched in 1997 is the source of the data for this study. The results indicate the existence of different degrees of technical and scale inefficiency in Uganda’s district referral hospitals over the sample period. There were productivity losses for the sample hospitals which are largely due to technological regress rather than technical inefficiency. Thus, changes in technology are needed if the hospitals are to become more productive, for instance through improved diagnosis tests, hospital information management. The findings illustrate one of the advantages of the frontier efficiency technique, namely the ability to identify the degree of emphasis that should be placed on improving technical efficiency vis-à-vis technological change. The study adds to the existing literature on health facility efficiency but additionally incorporates patient deaths in the measurement of hospital technical efficiency. Additionally, heterogeneity in the patient load is controlled for via a length of stay-based case-mix index. Quality of care was incorporated into the analysis by means of patient deaths. Super-efficiency was conducted to further distinguish between the technically efficient hospitals. To construct confidence intervals for individual hospitals technical efficiency scores, nonparametric bootstrapping was conducted. The efficiency vectors yielded have ready uses by policymakers in the hospital sector. Indicators of the relative efficiency of hospitals are needed to gauge whether hospital cost-containment efforts are succeeding, amongst other uses.
TESTING BEHAVIOURAL FINANCE THEORIES ON A FRONTIER MARKET - THE CASE OF NAIROBI SECURITIES EXCHANGE
(UNIVERSITY OF DAR ES SALAAM, 2006-12-01) Olowo, Patrick
This study investigates whether the revision of the NSE-20 share index yields abnormal returns and also if psychology (overconfidence) influences investment decisions at the NSE as is predicted by behavioural finance. On the one hand, wanting to exploit abnormal returns that are likely to result from the revision of the NSE-20 share index could be costly due to the involved costs and risks (limits-to-arbitrage argument). On the other hand, the expanding trading volume at the NSE over time could signal excessive trading that translates into loss in wealth for those engaged in it as is predicted by the overconfidence bias. We employ financial time econometrics to achieve our objectives. The study’s findings indicate that while the periodic revision of the NSE-20 share index yields abnormal returns, they are not statistically significant. Further, investment decisions depict psychological biases of overconfidence and its dynamic counterpart; biased self- attribution. Unlike in developed markets where the level of overconfidence depends on the precision of investor forecasts, in frontier markets overconfidence is high even when forecasts are highly imprecise. In addition to other factors, over-confidence-based trading contributes to excess volatility in the market. The study recommends that Kenya’s financial consumer protection programme that deals with financial regulation and financial literacy should be behavioural finance-biased since there is evidence that behavioural biases are at play in this market. It is expected that well informed and psychologically astute investors can better their capital allocation decisions.
A GLS ESTIMATION OF THE TWO-WAY RANDOM EFFECT MODEL WITH DOUBLE AUTOCORRELATION
(UNIVERSITY OF COCODY, 2008-06-02) BROU, Bosson Jean Marcelin
This thesis is a theoretical investigation of a frequently encountered econometric issue: the problem of autocorrelation. Under a two-way random effect context, we introduce serial correlation in the time-varying disturbances, leading to a double correlation framework. We analyze two major situations related to the structure of the error terms. The first one considers that the time-varying disturbances follow the same correlation pattern, with the same parameters. They are allowed to exhibit series such as the autoregressive of order 1 (hereafter AR(1)) or the moving-average of order 1 (hereafter MA(1)) processes. We also examined the case of unknown correlation. A detailed generalized least squares (hereafter GLS) procedure is deduced from the spectral decomposition of the variance-covariance matrix of the composite error term. A Feasible Generalized Least Squares (hereafter FGLS) approach is derived whatever the correlation status may be. The second error structure assumes that the time-varying disturbances can follow different correlation patterns. A general case of unknown serial correlation is considered, as well as the autoregressive and moving-average processes of order 1 models. We show that the variance-covariance matrix of the overall error term can always be written in a precise form, independently from the type of serial correlation. Once again, we deduce a GLS estimator from the inverse of this moment matrix. Underlying estimators are shown out and their asymptotic properties are studied. We find that the GLS estimator is asymptotically equivalent to a “within” estimator called the covariance estimator. Finally, a FGLS version is proposed.
EXCHANGE RATE AND BALANCE OF PAYMENTS ADJUSTMENT IN SIERRA LEONE, 1970-2005
(University of Ibadan, 2008-08-22) KORSU, ROBERT DAUDA,
In spite of series of exchange rate adjustments in the 1980s and the adoption of the managed floating exchange rate regime in 1990, Sierra Leone still experiences poor external sector performance. The nominal exchange rate has been depreciating since the 1980s without reflection on the real exchange rate and the balance of payments. Both the theoretical and empirical literature on the effects of the nominal exchange rate on the real exchange rate and, hence, the balance of payments, are inconclusive. Previous studies on Sierra Leone focused on the elasticity approach, ignoring the wide macroeconomic implications of changes in the exchange rate. This study therefore examined the role of the exchange rate in balance of payments adjustment in Sierra Leone. Based on the absorption approach to the balance of payments, a small open-economy macroeconomic model that incorporated the linkages among fiscal, monetary and exchange rate policies, and the balance of payments was constructed using annual data from 1970 to 2005. The empirical analysis was based on estimating the macroeconomic model using the three stage least squares, and counterfactual policy simulations. Using Ordinary Least Squares with moving average errors, an equilibrium real exchange rate model which was derived from the basic tradable and non-tradable goods framework was also estimated. Although increase in the nominal exchange rate was inflationary, it increased the real exchange rate, non-mineral export, aggregate export, output, absorption and import. Moreover, it decreased the trade balance and increased the overall balance of payments. The correlation coefficients between actual and simulated series ranged from 0.5 to 0.94, while the covariance proportions of the Theil’s inequality coefficients ranged from 0.47 to 0.98. An 85 % increase in the nominal exchange rate increased the price level by 3.9 %, real exchange rate by 6.9 %, non mineral export by 117.1% and the balance of payments by 22.6% while it decreased the trade balance by 48.4%. Loose fiscal and monetary policies and trade restrictions reduced the potency of nominal exchange rate in attaining real exchange rate depreciation and improvement in the balance of payments of Sierra Leone. The estimated equilibrium real exchange rate model showed that an increase in investment appreciated the equilibrium real exchange rate, implying that investment took place more in the non-tradable goods sector than the tradable goods sector of Sierra Leone. Also, deterioration in-terms-of trade and trade restrictions appreciated the equilibrium real exchange rate. Nominal exchange rate depreciation leads to depreciation of the real exchange rate, and expansionary fiscal and monetary policies appreciate the real exchange rate. Although nominal exchange rate depreciation increases export and hence income, it raises import and therefore deteriorates the trade balance. It is, therefore, recommended that fiscal and monetary policies be coordinated such that tight monetary policy is given priority, as this enhances the benefit of nominal exchange rate depreciation. Also, bolstering domestic capacity for the production of import-competing goods is essential.
ECONOMIC VALUATION OF NGORONGORO CONSERVATION AREA: A Travel Cost Approach
(UNIVERSITY OF DAR ES SALAAM, 2009-09-01) Mwankemwa, Lusajo
The purpose of this study is to estimate the recreational value of Ngorongoro Conservation Area (NCA) in Tanzania. To be able to give an estimate of the recreational value an economic valuation technique -the Travel Cost Method (TCM) is applied. The method will give rise to a demand function which can be applied in a regression model to estimate the relationship between the number of visits and the variables like travel cost, individual Income and educational level. This made it possible to derive the consumer surplus which is the value used to represent the recreational value of the NCA. The data used in the study is based on a sample of 240 visitors to the NCA. The study found the annual consumer surplus for NCA in 2008 to be about 507 229 USD (2008 prices) for the whole sample collected from the survey. However, the recreational value of NCA has been estimated to about 169.1 USD per visit. It is also important to note that the estimated value only represents one part of total economic value (recreational use value); the other values of the site’s total economic value have not been estimated in this study.
EXCHANGE RATE, OUTPUT AND INFLATION IN NIGERIA (1970-2007)
(University of Ibadan, 2010-09-06) JAMEELAH, OMOLARA YAQUB
Exchange rate policy is central to improving the economic performance of a nation. Over the years, Nigeria adopted both the fixed and managed float exchange rate systems in her attempt at attaining a realistic exchange rate. This is to ensure efficient allocation of foreign exchange resources that may pave way for a non-inflationary growth and a well diversified economy. However, the attainment of these goals remained elusive. Earlier studies on the effects of exchange rate on the Nigerian economy ignored differences in sectoral output responses to changes in exchange rate and economic agents’ expectations. This study, therefore, investigated the effects of anticipated and unanticipated changes in exchange rate on aggregate and sectoral output, and inflationary trends in Nigeria between 1970 and 2007. A macroeconometric model, based on a modified investment-saving and the liquiditymoney supply framework, was employed using secondary data, to capture the direct and indirect relationships between exchange rate movements, output and inflation. Exchange rate was split into anticipated and unanticipated components using the Autoregressive Moving Average method. The behavioural equations were estimated with the three-stage-least-squares technique and a general-to-specific estimation methodology was employed to ensure that important information was not left out. Statistical tests were used to confirm the goodness of fit of the estimated equations. The Theil’s inequality coefficients and the root mean squared errors were used to gauge the model’s efficiency and tracking ability. Their parameter values were within acceptable range. The model was then used to carry out ex post simulations of the effects of anticipated and unanticipated exchange rate depreciation on output and inflation. Some differences in sectoral output responses to anticipated and unanticipated depreciation were observed. The coefficients of anticipated exchange rate in the equations for aggregate output, agriculture, manufacturing, and output of services were -0.05, -0.15, -0.01, and 0.09, respectively. All of these were statistically significant at 5.00%, implying that anticipated depreciation reduced aggregate output and outputs of agricultural and manufacturing sectors, while it increased services sector’s output. Unanticipated exchange rate had insignificant negative effects on aggregate and sectoral outputs, except for manufacturing where the effect was positive. Anticipated depreciation had a strong inflationary effect with a significant coefficient of 0.28, while the impact of unanticipated exchange rate on inflation was negligible. Simulation results indicated that, on the average, a 15.00% anticipated depreciation would reduce aggregate output by 2.12% and agricultural, manufacturing and services sectors’ outputs by 9.23%, 2.00%, and 5.32% respectively; while it would raise inflation by 17.17%. Anticipated real exchange rate depreciation had significant contractionary effects on aggregate and sectoral outputs (except for the services sector) and promoted inflation, while unanticipated depreciation had negligible effects. This implied that policy neutrality hypothesis may not hold for the Nigerian environment and, more importantly, that existing structures could not support an expansionary argument for exchange rate depreciation during the period of study.
EDUCATION-MALARIA CONTROL NEXUS: THE CASE OF GHANA
(University of Ghana , Legon, 2011-06-06) ADJEI, DAVID SEFA
Malaria is a global public health issue as well as a national one in Ghana. It is the number one cause of under-five mortality in Ghana. Several attempts have been made to curb the negative effects of this disease which include the use of Insecticide-Treated Nets (ITNs), anti-malarial drugs, indoor-residual spraying, etc. In Ghana, major stakeholders have ensured the provision of ITNs at highly subsidized rates and even in some cases, distributed free of charge. Alongside these interventions, there has been information, education and communication of activities to help Ghanaians understand the malaria burden and its various means of control. Despite these efforts, there has been marginal decline in malaria cases and mortality rates. Usage of ITNs still falls below the 80% coverage of the vulnerable population as recommended by the WHO. Thus, this study sought to investigate the role and extent to which education influences the ownership of ITNs by households and the usage of ITNs by under-five children. Using a Probit Model and a Negative Binomial Distribution Model, the study examined the role of formal and informal education on the usage of ITNs by under-five children and number of ITNs owned by households in Ghana using data gathered from the Ghana Demographic and Health Survey (GDHS, 2008). The study revealed that household heads with higher education had a positive effect on the use of ITNs by under-five children as well as the number of ITNs owned by households. Health workers and community volunteers also played a positive role in the ownership and usage of ITNs by households and under-five children respectively. Results from the study implied that much attention should be paid to the training of health workers and community volunteers to aid them to effectively disseminate information regarding malaria and its means of control. Efforts should also be directed at ensuring high enrolment and completion of basic education which serves as a foundation for attainment of higher education in Ghana. Formal education aids in comprehension of the malaria burden and its means of control.
ENERGY DEMAND IN GHANA: A CASE STUDY OF THE ELECTRICITY SUBSECTOR
(University of Ghana , Legon, 2011-06-06) ADOM, PHILIP KOFI
In spite of the policy relevance associated with identifying the factors that affect electricity demand and quantifying their effects, there is still a dearth of research analysing aggregate electricity demand in developing countries. Even with the few studies that exist in the literature, the focal countries have been in Asia and the Middle East leaving a gap for Sub-Saharan Africa and Ghana in particular. In Ghana, efforts have been made (see Constantine et al, 1999 & Buskirk et al, 2006) to fill this gap. However, the focus of these studies has been on the household sector. The main focus of this work is, therefore, to forecast domestic electricity consumption specifically identifying what factors affect aggregate domestic consumption and assessing their impact using the ARDL Bounds Cointegration from 1975 to 2008. Also using data on Ghana I test the energy (electricity) conservation hypothesis using the Toda and Yomamoto Granger Causality test. The Bounds cointegration test shows evidence of a long-run equilibrium relationship implying that real per capita GDP, industrial efficiency, structural changes, and degree of urbanisation can be treated as the “longrun forcing variables” explaining total domestic electricity consumption. In the longrun, real per capita GDP, industrial efficiency, degree of urbanisation, and structural changes in the economy were found to be the main determinants of aggregate domestic electricity demand in Ghana while in the short-run all factors with the exception of structural changes in the economy were found to significantly impact on electricity demand. Aggregate domestic electricity demand is predicted to increase from 7,324 GWh in 2009 to 21,974 GWh in 2019 which represents an annual average growth rate of 11.8 percent. Based on the projected growth in electricity consumption, the total required plant capacity increase is projected to be 1,419 MW which represents an increase of 60% above the 2010 figure. This result implies that thermal generation as a percentage of total installed capacity is predicted to increase from the current 40% to 58% by 2019. Also I found evidence in support of the energy (electricity) conservation hypothesis for Ghana. The result shows that only industrial efficiency drives electricity consumption downwards. Based on this I suggest the development and intensification of the country‟s energy efficiency programs. Specifically proprietary electricity efficiency technologies and processes that have significant electricity-savings potential should be identified systematically. Also options should be provided to facilitate the deployment of such technologies in the industrial sector
DETERMINANTS OF DEFORESTATION IN GHANA
(University of Ghana , Legon, 2011-06-06) MINLAH, MICHAEL KAKU
Deforestation is one of the major environmental challenges facing Ghana. Today, the impacts of deforestation continue to impinge on livelihoods of rural and urban dwellers, disrupting important environmental functions and severely destroying forest ecosystems. Some studies have analyzed factors that influence deforestation in Ghana. However, none have placed emphasis on the occurrence of the Environmental Kuznets Curve for deforestation in Ghana. This study employs the Auto Regressive Distributed Lag (ARDL) Bounds Testing approach to cointegration to empirically investigate the factors that cause deforestation in the long and short run as well as investigating the occurrence of the Environmental Kuznets Curve (EKC) for deforestation using time series data from 1970 and 2009. The long run estimation results indicate that variables such as urbanization, rural population pressure, globalization, Structural Adjustment Program (SAP), and agricultural technology affect deforestation in Ghana positively, while agricultural production index, forest exports value as a percentage of GDP, enforcement of property right and forest protection and exchange rate influence deforestation negatively. The impact of total external debt on deforestation Ghana was positive but not significant implying a weak confirmation of the Debt Resource Hypothesis in Ghana. Analysis of the EKC for deforestation in Ghana indicate that the phenomenon is real in Ghana with the per capita income turning point being at $ US 364.99 (in constant 2000 $ US) which will occur in 2011 at a deforestation rate of 1.5%. General and specific recommendations aimed at reducing deforestation are provided.
ACCESS TO FINANCE AND FINANCING PATTERNS OF FIRMS IN GHANA
(University of Ghana, Legon, 2011-06-22) AMAKYE, KWAKU
Access to external sources of financing for firms has been and continues to be an obstacle to the operations and growth of firms. Firms have used diverse means to finance their operations, especially internally generated funds. The purpose of the study was to investigate the determinants of the key external sources of financing working capital and new fixed investments by firms in Ghana. The main source of data for this study is the World Bank Enterprise Survey on Ghana; a firm level survey conducted in the year 2007. The Tobit estimation technique was used to investigate the determinants of the external sources of financing whiles analysis of variance was used to determine the variability in sources of finance according to firm size. The results of the study show that access to finance is perceived by firms as the second most serious obstacle to their operations. Secondly firms tend to rely more on internal sources of financing than external sources of financing. In the use of external sources of financing working capital, trade credit is more important than bank financing. However, firms finance a higher proportion of their new fixed investments from banks as compared to other sources of financing. The factors which influence the use of external sources of financing are firm size, audited financial statements, sector, educational level of the manager, ownership and location. The study recommends that firms, especially small firms, keep quality financial information on their operations. As firms put in place measures to improve on the needed financial information to external finance providers, financial intermediaries should also be encouraged to introduce more relationship lending products, if they are to meet the financing needs of Small and Medium Enterprises.
MIGRATION-EDUCATION LINKAGES: THE CASE OF GHANA
(University of Ghana , Legon, 2011-06-22) AMUAKWA-MENSAH, FRANKLIN
Education and migration are very essential in development outcomes since education improves the capability of the individual. Despite studies on migration in Ghana, the link between migration and education in the Ghanaian economy is unclear. This study therefore presents an empirical examination of the linkages between migration and education in Ghana. While GLSS 4 and GLSS 5 datasets were used for the descriptive analysis, the GLSS 5 dataset was used for the econometric estimations. Heckman‟s two stage method was used in examining the impact of education on migration; however the Ordinary Least Squares (OLS) estimation was used to find the impact of migrant remittances on education expenditure. The relationship between migration and education was also examined by using the chi-square test. The empirical results revealed that a greater proportion of internal migration in Ghana is rural-rural and urban-rural. Also, an individual‟s educational attainment positively affects his/her decision to migrate. Further, it was seen that other socio-economic variables significantly affect an individual‟s migration decision. Though education affects the migration decision in both urban and rural areas, its significance varies for the different stages of educational attainment. Moreover, it was found that migrant remittances positively affect educational expenditure. Based on the findings of the study it is recommended that the education system should be improved in the entire country by providing qualified teachers and studying materials, and the rural areas should be upgraded close to the standard of the urban area in order to reduce inequality in educational infrastructure. Also, a smooth functioning credit market should be created in the country to provide financial support to households which do not receive remittances to finance their educational expenditure.
INFLATION AND ECONOMIC GROWTH IN SIERRA LEONE
(UNIVERSITY OF CAPE COAST, 2011-08-03) SWARAY, SAIDU
The study examined the relationship between inflation and economic growth in Sierra Leone using annual data for the period 1979 to 2008. Employing autoregressive distributed lag (ARDL) approach to cointegration, the study found a cointegrating relationship among the variables when real GDP was used as the dependent variable and no cointegrating relationship among the variables when inflation was used as the dependent variable. The bounds test results revealed that inflation exerted a negative and statistically significant effect on economic growth both in the short-run and long-run suggesting that higher rates of inflation is inimical to economic growth in Sierra Leone. Also, investment as a share of GDP and government expenditure exerted a positive and statistically significant impact on economic growth both in the short-run and long-run suggesting that government expenditure and investment are critical in enhancing sustained economic growth and development. The Granger causality test result revealed a unidirectional causality between inflation and economic growth and ran from economic growth to inflation. Thus, the study concluded that government expenditure in the form of investment is an important channel through which the economy can achieve economic growth. Hence, the study recommended that government should embark on judicious investment especially in infrastructure to achieve sustained economic growth.
COMPETITION AND EMPLOYMENT IN THE TELECOMMUNICATIONS INDUSTRY IN TANZANIA
(University of Dar es Salaam, 2011-09-22) Mtingele, Achilana Mkunga
This dissertation examines the impact of competition on employment in the telecommunications industry in Tanzania. Specifically, it addresses the question “Does competition in telecommunications industry in Tanzania have any significant impact on employment?” Furthermore, the competitive pressure existed in the industry after liberalization in the 1990s is what induced the study. The panel data available for this dissertation over the period of seventeen years, allows estimation of competition and levels of employment that control for firm fixed effects. The model estimated relies on employment equation that uses competition variable measured by Herfindhal-Hirschman Index as one of the regressors. The findings based on OLS estimates indicate that 1 per cent increase in competition increases employment by 1.02 per cent but the coefficient estimate is not significant, partly suggesting biasness of OLS. When firm fixed effects are controlled for, the model demonstrates robust positive correlation between competition and employment; 1 per cent increase in competition increases employment by 0.66 percent; these results are highly significant at 5 per cent. Such results suggest that OLS estimates are indeed biased. The dissertation concludes significant positive correlation between employment and competition hence recommends for more efforts to support employment creating competition.
TRANSMISSION MECHANISM OF MONETARY POLICY IN NIGERIA
(University of Ibadan, 2011-11-06) OREKOYA, SAMUEL OLATUNDE
The Central Bank of Nigeria (CBN) has pursued, among other goals, low and stable domestic price level and output growth using various monetary policy instruments. Despite these efforts, output growth rate averaged 1.32% between 1980 and 1989 and 2.87% between 1990 and 1999. Also, the monetary authority’s inflation rate target of 5.00% in 1992 and 31.00% in 1995 escalated into 44.59% and 72.81% respectively. There has been limited attempt to investigate the channels through which monetary policy affects output and prices in Nigeria. This study, therefore, empirically investigated monetary policy transmission mechanism and sought to establish the relative effectiveness of various monetary policy instruments in Nigeria. A Monetary Transmission Mechanism (MTM), predicated on Mishkin framework, that captures the impact of monetary policy in an economy was employed. The MTM focused on bank lending, exchange rate and interest rate channels that are evident in most developing economies like Nigeria. A Structural Vector Autoregressive (SVAR) model, based on monetary policy transmission dynamics, which identified the magnitude and impact of structural shocks, was developed to test the importance of these channels. Generic, composite and separate models including the impulse responses of the channels were estimated. Variance decomposition was also conducted to determine the magnitude of fluctuation attributable to different shocks. With quarterly data from 1970 to 2008, the time series properties of the models’ variables were ascertained using the Augmented Dickey-Fuller and Phillips-Perron tests. The effectiveness of Reserve Money (RM) as a monetary policy instrument over Interest Rate (IR) was evident as a marginal increase of 0.15% in RM precipitated output and prices decline by 0.20% and 0.60% respectively. The weakness of interest rate (IR) as a policy instrument was shown with an increase of 2.02% in IR yielding no significant response from output and prices. Bank lending declined from 0.89% in the first quarter to 0.23% below the baseline in the second quarter following a marginal increase of 0.05% in RM. Output declined consequently below the baseline by 0.12% and 0.15% while prices rose by 0.15% and 0.10% in the second and third quarters respectively. By implication, the weak response of exchange rate to similar increases in IR of 2.02% and RM of 0.15% suggests that this channel did not capture MTM in Nigeria. Also, output and prices’ non-response to increase in IR of 2.02% and RM of 0.15% suggested that interest rate channel is weak. Bank lending channel remained the existing MTM in Nigeria, while the impact of monetary policy shock on output and prices occurred only after a time-lag of 6years. Reserve Money was a potent policy instrument with output responding more to policy variations than prices. Bank lending remained a significant channel for propagating policies to target variables. The CBN should therefore focus more on the use of RM as a policy instrument rather than a hybrid of reserve money and interest rate. There should also be emphasis on price level stability since this has the tendency of fostering output growth.
THE IMPACT OF IMMIGRATION ON UNEMPLOYMENT AND ECONOMIC GROWTH IN KENYA
(University of Mauritius, 2012-02-20) MULATIA, Charles Maingi
This paper employs the annual time series data spanning 1980 to 2010 to analyze the impact of immigration on unemployment and economic growth in Kenya. This is followed by the recent attacks from the Somali’s insurgent group; al shabaab. The militias’ invasion of Kenya’s territory coupled with the fear that immigrants rob natives their jobs has raised eye brows among Kenyans. This paper seeks to allay such fears and dig on the real impact of immigrants on Kenya’s economic performance via the product and hence the labour market. In the analysis, the study makes use of instrumental variable (IV), a special case of GMM, due to the problem of data limitation and endogeneity amongst the variables. The results indicate that on obtainable evidence, fear of large gloomy employment and economic growth are not justified. The perception that immigrants steal jobs away from existing population, thus contributing to large increases in unemployment do not find verification in the analysis of data.
The Role of Food Price Inflation in Lesotho
(University of Mauritius, 2012-03-06) Thamae, Retselisitsoe Isaiah
This dissertation analyses the role of food price movements in inflation within the Lesotho’s economy. The empirical results from this analysis reveal that food price inflation in Lesotho has generally not only been more volatile and higher than nonfood inflation, but also more persistent than the inflation of nonfood products. Furthermore, the persistent movements in food prices have appeared to be the major source of increasing inflation persistence in Lesotho, which was found to be low but rising over time. Food price movements are also discovered to have significant impact on core inflation, thereby giving evidence that food prices contain some useful information about the underlying inflation trends in Lesotho. On the other hand, the results have shown the presence of strong second-round price effects between food and nonfood inflation. These findings, therefore, implies that the setting and communication of monetary policy in Lesotho should be based on developments in underlying inflation rather than overall inflation However, any attempt to capture the underlying inflation using measures that excludes food items only on the basis of their high volatility would be unjustified.
THE INCIDENCE AND DYNAMICS OF INTRA-INDUSTRY TRADE BETWEEN GHANA AND ECOWAS
(University of Ghana , Legon, 2012-06-06) OFFEI, EMMANUEL LARBI
Since intra-industry trade (IIT) was first noticed in the 1960s, theoretical and empirical studies on this type of trade have being growing rapidly. Very few studies however, have investigated IIT in the Economic Community of West African States (ECOWAS) region. This current study attempts to bridge the literature gap by examining the incidence and determinants of IIT between Ghana and its ECOWAS trading partners using empirical trade data from 2004 to 2010. The results show evidence of IIT between Ghana and ECOWAS although it is low as compared to other regions. Sectors found to exhibit high incidence of IIT are transportation, animal products and chemicals industries. At the country level, Cote d’Ivoire has the highest IIT incidence with Cape Verde and Guinea Bissau having no IIT with Ghana. The determinants of IIT are estimated using the gravity model and the results indicate that per capita income, dissimilarity in per capita income, foreign direct investment, and common language affect IIT positively while gross domestic product and geographic distance influence IIT negatively. The main hypothesis guiding this study is that similarity in per capita income between Ghana and the ECOWAS trading partners stimulates IIT. This hypothesis is however rejected because the study finds a positive correlation between dissimilarity in per capita income and intraindustry trade instead of the a priori expectation of negative sign. The study recommends that policies should be introduced to encourage the expansion of the manufacturing sector in member countries. Exchange rate variability and bottlenecks in the level of traffic flow along interstate corridors must be removed to enhance intra-industry trade within the subregion.
EXTERNAL DEBT, INVESTMENT AND ECONOMIC GROWTH IN GHANA
(UNIVERSITY OF BENIN, 2012-07-01) Tuffour, Joseph Kwadwo
The broad objective of this study is to empirically estimate the influence of external debt on economic growth and investment in Ghana. The specific objectives are to determine the: impact of external debt on GDP growth, the threshold level at which external debt becomes burdensome and the possible growth loss of exceeding external debt threshold and lastly to determine whether or not external debt crowds out investment. A macroeconomic framework of economic growth was developed with linkages to investment and external debt. This served as the methodological basis. The econometric model specifications entail equations explaining output and investment. The research used time series data over the period 1970 – 2009. Non-linear Least Squares and Two Stage Least Square estimation methods were used. In addition, summary statistics and graphical approaches were applied. A non-linear relationship between external debt and output growth was established. The external debt threshold was estimated to be 46.2 percent, supporting the external debt Laffer curve hypothesis. The positive contribution of external debt (at lower levels up to the threshold) supports the notion that, a certain minimum requirement of external debt is necessary to support the growth process. On the other hand, beyond the threshold level of external debt accumulation, the impact of external debt on economic growth begins to fall. The threshold level suggests that, Ghana encounters growth rate problems at a moderate external debt to GDP ratio. The research also reveals a cumulative economic growth loss of 12.28 percentage points (indicating the growth loss when the estimated external debt threshold is exceeded). This leads to an annual average growth loss of 0.31 percentage points, showing how high growth would have been if the external debt to GDP ratio had stayed at 46.2 percent. The research further shows that, beyond the threshold level, the positive impact of foreign debt on growth would begin to fall until the external debt to GDP ratio reaches 92 percent. Any foreign debt acquired further than the 92 percent of GDP would actually reduce output growth. In addition, the research unravels the existence of the debt overhang problem. This occurs in two ways through: crowding out effect on private investment, constraining public sector liquidity as well as discouraging private investment. Also, it was noted that, the accelerator effect applies in Ghana for the study period.
TESTING PECKING ORDER THEORY ON DIVIDEND PAYOUT RATIO IN GHANA
(University of Ghana , Legon, 2012-07-10) DOKU, ISAAC
The Pecking Order Theory (POT) suggests that firms prefer internal over external sources of financing investment. For external sources of finance, firms prefer the use of debt before equity to finance investment. However, the POT did not show how the capital structure decision of firms influences their dividend decision. POT can be combined with Lintner’s dividend model to generate some predictions for financial leverage. This leads to the conclusion that when firms are faced with earnings shortage, firms will borrow to pay dividend at the expense of profitable investment. This means there will be a positive interaction between financial leverage and dividend payout ratio, and a negative interaction between financial leverage and investment. The theory further predicts that as firms make more profit, they would demand less debt representing a reduction in financial leverage. The predictions of the POT where made based on data from developing countries. However, due to differences in accounting and auditing practices between developed and developing countries, these predictions might not hold in developing economies. A cross sectional analysis was implemented on 33 out of the 34 listed firms on the GSE for the period 2004-2009, employing both the 3SLS and OLS technique to test the predictions in Ghana. The findings indicate that there is a positive significant interaction between financial leverage and dividend payout ratio among listed firms in Ghana. The results further indicate that profitability has the predicted negative influence on financial leverage, indicating that the POT explains dividend payout ratio in Ghana. The results did not show any significant interrelationship between financial leverage and investment, and between investment and dividend payout ratio among listed Ghanaian firms. The results also show that dividend payout ratio in Ghana is very low, therefore, policymakers should strengthen and enforce laws on dividend payment in Ghana

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