Trade shocks and macroeconomic fluctuations in Africa
Kose, M. Ayhan and Riezman, Raymond Glenn (1999) Trade shocks and macroeconomic fluctuations in Africa. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. (Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)).
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This paper examines the role of external shocks in explaining macroeconomic fluctuations in African countries. We construct a quantitative, stochastic, dynamic, multi-sector equilibrium model of a small open economy calibrated to represent a typical African economy. In our framework, external shocks consist of trade shocks, modeled as fluctuations in the prices of exported primary commodities, imported capital goods and intermediate inputs, and a financial shock, modeled as fluctuations in the world real interest rate. Our results indicate that while trade shocks account for roughly 45 percent of economic fluctuations in aggregate output, financial shocks play only a minor role. We also find that adverse trade shocks induce prolonged recessions.
|Item Type:||Working or Discussion Paper (Working Paper)|
|Subjects:||H Social Sciences > HF Commerce
D History General and Old World > DT Africa
|Divisions:||Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation|
|Library of Congress Subject Headings (LCSH):||Macroeconomics, Economics -- Mathematical models, Stochastic analysis, Africa -- Commerce|
|Series Name:||Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation)|
|Publisher:||University of Warwick. Centre for the Study of Globalisation and Regionalisation|
|Place of Publication:||Coventry|
|Number of Pages:||47|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
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