Price and quality components of imports of food products into the UK

This paper analyses the principal factors responsible for the growth in the value of imports of the UK food sector, during the period 1985-90. On the basis of estimates of translog multilateral price indices it assesses the relative contribution of changes in the quality of imported products and factors other than quality to growth in import values of food products. The main conclusion is that growth in quality appears to be the principal reason for the growth in unit values of imports and the trade deficit incurred by the food manufacturing sector.     

The Role of Capital Flight and Remittances in Current Account Sustainability in Sub‐Saharan Africa

Abstract: The literature on capital flight and remittances is copious, as a plethora of studies in recent years have focused greater attention on the determinants and impact of capital flight and remittances in the development process. These issues are particularly pertinent to Africa in view of its relatively high incidence of capital flight in the presence of foreign exchange constraints, limited foreign capital inflows, external indebtedness and high dependence on overseas development assistance. The principal aim of this paper is to estimate the extent and magnitude of capital flights from Africa and remittance inflows to Africa, and to assess their role in current account sustainability. The paper employs standard methodological approaches to estimating capital flight and remittances for selected African countries and analyses their relationships with current account balance and key economic indicators. The findings from the statistical exercises in the paper yielded a number of important results:

• ? The magnitude of capital flight from Africa has increased considerably in recent years, with widespread fluctuations and volatility.
• ? The volume of remittances into Africa has increased dramatically but steadily.
• ? There is a negative association between balances on current account and capital flight, implying that capital flights tend to worsen current account difficulties.
• ? There is a positive relationship between remittances and current account, suggesting that remittances could play an important role in mitigating current account problems.
• ? The link between remittances and economic growth is positive, albeit insignificantly in the statistical sense, suggesting some evidence of the crucial role of remittances in the economic growth and development process.
• ? External debt and capital flight are positively intertwined, providing support to the so‐called ‘round‐tripping’ or ‘back‐to‐back’ hypothesis

The policy implications of these findings are that in spite of the good progress made by many African countries towards economic and political reforms, more innovative policy thinking and reform deepening must be initiated to create a conducive environment for private sector participation in general and foreign capital (including capital flight reversal) in particular. Similarly, there is a need for incentivising and mainstreaming remittances into national development strategies with the view to promoting the growth‐enhancing effects of remittances. A wide range of policy options and forward thinking analyses were advanced in the paper.     

Modelling spillovers between stock market and FX market: evidence for Nigeria

Abstract

The need to capture the foreign exchange (FX) and stock markets nexus in Nigeria is underscored by the rapidly expanding financial markets integration due to trade and financial liberalization policies which seem to have enhanced the inflow of capital as well as accelerated investment/business interactions. Using variants of the VARMA-AMGARCH model of McAleer, Hoti, and Chan (2009), we find that volatility persistence in the stock market is accentuated by bad news in the market and moderated by good news in the FX market. Finally, we establish that ignoring the asymmetric effects may exaggerate the spillover results.     

Testing the Martingale Difference Hypothesis (MDH) with Structural Breaks: Evidence from Foreign Exchanges of Nigeria and South Africa

ABSTRACT

This study tests for MDH in two prominent foreign exchange (FX) markets in Africa, Nigeria and South Africa using three benchmark currencies (euro, dollar and pound sterling). Data utilized cover time series closing rate data set of five-day weekly frequency spanning December 14, 2001 to September 26, 2014. The study considers both the linear and nonlinear measures for MDH with better size and power properties. We also capture structural break endogenously from the data stream using Perron (2006) unit root test with structural break. Three striking findings are discernible from our analyses. First, on average, the South African FX market appears to be more efficient than the Nigerian FX market. Thus, the latter may be more susceptible to speculations than the former. Second, ignoring significant structural breaks may render statistical inferences invalid. Third, the choice of methodology does matter when testing for MDH of foreign exchanges in Africa.     

Improving Nigeria’s Inflation Forecast with Oil Price: The Role of Estimators

In this study, we propose a supply-side augmented Phillips curve for an oil dependent (Nigerian) economy. We argue for the role of oil price as a good proxy for the supply side of inflation given the structure of the Nigerian economy, which essentially relies on oil revenue. Thus, we compare the forecast results of the oil-based augmented Phillips curve with the traditional variant, as well as time series models such as ARIMA and ARFIMA. We also test for any probable asymmetric response of Nigeria’s inflation forecast to oil price changes. The forecast analyses are conducted for both in-sample and out-of-sample periods using alternative forecast measures. We employ the estimators of Lewellen (J Financ Econ 74:209–235, 2004) and Westerlund and Narayan (J Financ Econ 13(2):342–375, 2015) in order to account for relevant statistical properties of the predictors, and their results are compared with the standard OLS estimator. In addition, we follow the extended version of Westerlund and Narayan, constructed into a linear multi-predictive form by Makin et al. (J Int Money Financ 40:63–78, 2014) and Salisu et al. (Energy Econ, 2018), and a nonlinear (asymmetric) multi-predictive model by Salisu and Isah (Econ Model, 2018). We find that the augmented (oil-based) Phillips curve outperforms its traditional version, as well as time series models for both forecast samples. However, oil price asymmetric effects become evident when large samples are employed. Also, we find that the choice of estimator does matter for accurate inflation forecasts and by implication, accounting for the salient features of the predictors, if they exist, has implications on the forecast performance. Our results are robust to alternative oil price proxies and forecast measures.

     

Debt Relief and Credit to the Private Sector in African Countries

Abstract: The purpose of the paper is to empirically investigate the link between debt relief and credit to the private sector in African countries using a panel method over the period 1988–2004. The motivation for investigating the relationship between debt relief and credit to the private sector follows Christensen's (2004) hypothesis that domestic debt has a negative impact on the credit to private sector; therefore debt relief is expected to alleviate domestic debt and thereby create space for domestic credit, which if it is mostly constituted of public sector credit, crowds out credit to the private sector. The main results of the paper are as follows: (1) debt relief has a significant and positive effect on credit to the private sector in the short term; (2) in the long term, debt relief has positive effects on domestic credit to the private sector only when associated with good initial institutional quality.     

Assessing the hedging potential of gold and other precious metals against uncertainty due to epidemics and pandemics

Quality & Quantity - We assess the hedging capabilities of four prominent precious metals namely gold, palladium, platinum and silver against market risks due to epidemics and pandemics. The...     

Machine Learning Predictions of Housing Market Synchronization across US States: The Role of Uncertainty

The Journal of Real Estate Finance and Economics - We analyze the role of macroeconomic uncertainty in predicting synchronization in housing price movements across all the United States (US) states...     

Youth unemployment in Nigeria: nature,causes and solutions

Quality & Quantity - This study investigates the nature and causes of youth unemployment in Nigeria, with the aim of proffering evidence-based workable solutions as policy recommendation. Its...