Macro Economics

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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.
DETERMINANTS OF GROSS DOMESTIC SAVINGS IN UGANDA
(MAKERERE UNIVERSITY, 2018-12-01) NAGAWA, Vivian
In Uganda‘s development aspiration ―VISION 2040‖, Uganda aspires to transform its society from a peasant to a modern and prosperous middle-income country by 2040, with per capita income of USD 9, 567. It is a commitment that to achieve the vision, savings as a percentage of GDP should be over 35 percent. Notwithstanding such a high commitment, GDS as a percentage of GDP has remained below the desired target, standing at 16.5 percent in 2017. The objective of this study was to empirically establish the determinants of gross domestic savings (GDS) in Uganda. The study was guided by the lifecycle/permanent income hypothesis theoretical framework. The study used time series annual data from World Development Indicators for the period 1980 to 2017; and used Augmented Dickey Fuller and Phillips Perron tests to check time series properties of the variables. The unit root tests revealed that variables were both integrated of order zero and one. Accordingly, to test for both the long-run relationship and short run dynamics of the model, ARDL bounds test was adopted. The empirical results suggested that in the long run, Gross Domestic Product growth rate (GDPg), Broad money (M2) and Foreign Domestic Investments (FDI) have a positive impact on savings, while Current Account Balance (CAB) and Gross National Expenditure (GNE) have a negative effect on savings. The study also revealed that deposit interest rate was not a statistically significant determinant of GDS in the long run. The short run results on the other hand showed that all except CAB and GDPg have a positive and statistically significant impact on GDS. The key policy messages of this study are twofold that is: First, there is need for export promotion and import substitution strategies to improve on current account balance and hence savings through their impact on GDP. Second, there is need to ensure a stable economic environment to attract more Foreign Direct Investments.
AN ANALYSIS OF MACROECONOMIC DETERMINANTS OF HOUSE PRICE VOLATILITY IN NAMIBIA
(UNVERSITY OF NAMIBIA, 2020-09-23) KAMATI, KATRINA NAMUTENYA
The housing sector plays a significant role in the economy however, house prices are presumed to be more volatile than other goods and services, because of their high demand. The aim of this study was to conduct an empirical analysis of the determinants of house price volatility in Namibia. Moreover, the direction of causality between house price volatility and the macroeconomic determinants was examined. The ARCH and GARCH models together with the VAR/VECM approaches were used to analyse quarterly data from 2007 quarter 1 to 2017 quarter 2. The findings show that house prices in Namibia are volatile and the volatility is highly persistent. A long run relationship was established between house price volatility and the macroeconomic determinants. It was further established that volatility itself, GDP and mortgage loans significantly determine house price volatility. In addition, a unidirectional causality from GDP and mortgage loans to house price volatility was found. The IRF analysis showed that shocks to the selected macroeconomic variables, except the prime lending rate magnify volatility. It was also confirmed by the VDC analysis that mortgage loans and current volatility are the most significant variables that explain variation in house price volatility. Policy makers should therefore monitor macroeconomic factors closely and ensure that the economy is growing to mitigate the issues of house price volatility.
ANALYSING THE EXCHANGE RATE VOLATILITY RELATIVE TO TRADE BALANCE: THE CASE OF SACU COUNTRIES
(UNVERSITY OF NAMIBIA, 2020-09-23) HAANSENDE, CHRISTINE MAZUBA
The term exchange rate volatility is widely used in the financial market. The exchange rate is determined in the foreign exchange market, which is said to be the largest market in the world and it trades financial assets. Many studies have shown that researchers, relevant practitioners and policy makers pay lots of attention to the issue of exchange rate and volatility. Volatility is known to be very important when it comes to making decisions in financial trading activities that are based on fluctuations on return. This study has two main objectives, namely to analyse the kind of relationship between exchange rate volatility and trade balance in the selected member states of the SACU region in which the selected countries are Botswana, Namibia, Swaziland and South Africa. The second objective of this study was to determine the impact between exchange rate volatility and trade balance in the selected member states of the SACU region. The time series data which was used in this study was from the period 1986 to 2016. The Generalized Autoregressive Conditional Heteroscedasticity (GARCH) model, the impulse response functions and variance decompositions are used in the analysis. Results show that there is a short-run relationship between exchange rate volatility and trade balance. It was found that there is a positive and negative impact between these two variables, with high volatility. Furthermore, this study recommends all Central Banks in the SACU region to intervene in order to mitigate exchange rate volatili
AN ANALYSIS OF MACROECONOMIC DETERMINANTS OF REMITTANCES IN SOUTHERN AFRICA
(UNVERSITY OF NAMIBIA, 2020-09-29) SINGOGO, FWASA K
The study analyzed macroeconomic determinants of remittances in Southern Africa and made use of annual data for the period ranging from 2003 to 2016. The macroeconomic determinants used include: remittances themselves, the inflation rate, GDP growth rate, the nominal exchange rate, broad money and age dependency ratio. In doing so, the study further analyzed cyclicality and the volatility of remittances in the region in order to get a more rounded perspective. In seeking to meet its objectives, a panel study was carried out using both the fixed and random methods of which the random method was found to be most appropriate. The Southern African countries included in the study were Botswana, Lesotho, Malawi, Mozambique, South Africa, Swaziland and Zambia. Other major tests applied included a Standard deviation test for volatility; the Hodrick Prescott (HP) filter with detrended series, to analyze for cyclicality; and cross correlation tests to determine if there existed pro or counter cyclical behavior. The study found that amongst the macroeconomic determinants used; only GDP growth (changes/improvements in the home countries’ economic environment) and the exchange rate were statistically significant with respective positive relationships with remittance inflows. It was also found that volatility of remittances was low, which was evidently reflected in the values of the standard deviations with the highest being 1.784. In regards to cyclicality, the tests exhibited prominence of pro cyclical behavior which could imply that migrants optimize placement of their savings between origin and destination countries of which the remitting of funds is a form of investment. However, several periods of counter cyclicality were observed that made it hard to out-rightly conclude pro cyclicality as being the definite trend.
CRUDE OIL PRODUCTION AND MACROECONOMIC PERFORMANCE IN GHANA
(University of Cape Coast, 2021-02-12) Tunyo, Delali Aku
This study investigated the impact of crude oil production on macroeconomic performance in Ghana. The study employed monthly data from January 2011 to December 2018. The structural vector autoregressive (SVAR) model was employed to analyse the impact of crude oil production on macroeconomic performance. The findings of the structural impulse response function revealed that crude oil production had no impact on the agricultural sector, manufacturing sector, services sector, real effective exchange rate and inflation. However, crude oil production had a positive impact on fiscal balance. The findings of the structural forecast error variance decomposition showed that crude oil production accounted for a small amount of variation in all the variables except fiscal balance for which it accounted for the largest portion of the variation. The study concluded that crude oil production had no significant impact on the non-oil sectors, real effective exchange rate and inflation. However, crude oil production had a positive impact on fiscal balance. The study recommended that the government through GNPC and major oil stakeholders such as Tullow Ghana Limited, Kosmos Energy Ghana and Anardako Petroleum Corporation should establish of oil refineries, petroleum industries and fertilizer plants domestically and also the development of the manufacturing and the services sector to provide the backward and forward linkages that needs to be shared between the oil sector and other sectors of the economy.
INSTITUTIONS, FOREIGN DIRECT INVESTMENT AND DOMESTIC INVESTMENT IN SUB-SAHARAN AFRICA
(University of Cape Coast, 2021-07-06) GALAH, JACOB KWADZO BRAVO
The study examines the effects of institutions and foreign direct investment on domestic investment in Sub-Saharan Africa (SSA) from 2006-2017. To achieve the objectives of the study, fixed and random effects estimation techniques were employed on annual panel data of 28 countries in Sub-Saharan Africa. Institutional variables (institutions) were found to have positive effects on domestic investment in SSA. Good institutions, therefore, contribute to increasing domestic investment in SSA. Again, the results indicate that an enhancement of government effectiveness in the presence of foreign direct investment, domestic private investment increases. The results also disclosed that institutions in general have positive effects on domestic private investment. The study, therefore, recommends that governments of SSA through their respective public and civil services should ensure the improvement of institutions in their respective countries to serve as a conduit for enhancing domestic investment in the subregion.
ANALYSING THE EFFECT OF BUDGET DEFICIT DYNAMICS ON MACROECONOMIC VARIABLES IN NAMIBIA
(University of Namibia, 2021-10-08) HANGO, ANNA LIISA
This study analysed the effect of budget deficit dynamics on economic growth (gross domestic product), unemployment and interest rate in Namibia. The study employed the Autoregressive Distributed Lag Model (ARDL) and Bounds test for the cointegration approach using time series annual data for the period 1990 – 2018. The cointegration results confirm the presence of a long run relationship among variables in all models. In order to capture the short run effects of the budget deficit, the study employed the error correction model (ECM) and decisions were made based on a five percent level of significance. Focusing on the core explanatory variable which is budget deficit, the empirical results discovered a negative and significant relationship between budget deficit and economic growth both in the short and long run period, implying that high deficit deteriorates the growth rate of the economy. Moreover, the results show a direct but insignificant relationship between deficit and unemployment rate in short and long run period in Namibia. In addition, budget deficits show a negative but insignificant relationship towards real interest rate in both the short and long run period. As a result, the study resolved that the Neoclassical theory holds in Namibia. Consequently, in order to contain this adverse effect, the government should ensure that the exacerbated level of budget deficit is addressed.

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