The relative importance of monetary and fiscal policies in selected African countries

This paper examines the relative importance of monetary and fiscal policies in ten African countries using a trivariate vector autoregressive (VAR) model. The analysis is undertaken with annual data from 1960 to 1990 in logarithms first difference form. In five of the ten countries, our empirical results support the monetarist position that monetary policy is more important than fiscal policy. On the other hand, the Keynesian position that fiscal policy is more important than monetary policy is confirmed in the other five countries of the sample. The results of this study suggest that a particular economic philosophy cannot be generalized for African countries. These results may therefore prove useful not only to policy-makers but also to those interested in building macroeconomic models which may have implications for aggregate-demand management.     

Identifying the distressed areas: An integrated-multivariate approach

The paper seeks to identify the areas of economic distress in a development planning objective aims at maintaining inter-regional balance in economic development. Using an integrated rather than a fragmentary approach, and employing the multivariate technique in the analysis, the results show that the country in question is still far from achieving the desired goal.     

Currency Substitution and the Stability of the Demand for Money in East Asia

Abstract

This paper models and tests the stability of the demand for money in five East Asian countries—Indonesia, Malaysia, Philippines, Singapore, and Thailand—in the context of an open economy. The Johansen multivariate cointegration vector error correction analysis against quarterly data covering the period 1985:1–2001:4 was used. It was found that a stationary long run cointegrating relationship exists between broad money, real income, domestic interest rates, foreign interest rates corrected for exchange rate depreciation, and the expected rate of depreciation of the exchange rate. The results show that US Treasury bills rates and the foreign exchange rate vis-à-vis the US dollar play a significant role in the East Asian countries money demand relationship. This suggests that currency substitution vis-à-vis the US dollar may be an important consideration in the design and implementation of monetary policy in the East Asian countries. Furthermore, the results show that the Asian currency crises impacted the money demand functions negatively in these countries. CUSUM and CUSUMSQ stability tests show no evidence of parameter instability of the money demand functions in three of the five countries throughout the period under investigation.     

Incomes policies,inflation and strikes in Nigeria, 1950—1985: an empirical investigation

The effects of incomes policies and inflation on the incidence of strikes in Nigeria for the 1950–1985 period are examined. Studies have analysed extensively the determinants of strike activity in developed countries, however relatively little empirical analysis of strike determinants in less developed countries exists. An attempt is made to fill this gap by including key economic, organizational, and institutional variables into a model that is capable of predicting the variations in strikes in Nigeria, a developing country with a growing unionized sector. The estimated results of the model show that strikes in Nigeria are positively influenced by the level of inflation, the level of union membership, incomes policies, and time trend.     

Exchange rate volatility and export growth in Nigeria

This article examines the impact of exchange rate volatility on Nigeria's exports to its most important trading-partner–the United States over the quarterly period January 1980 to April 2001. Using cointegration and vector error correction (VECM) framework, empirical tests indicate the presence of a unique cointegrating vector linking real exports, real foreign income, relative export prices and real exchange rate volatility in the long run. Furthermore, the results show that increases in the volatility of the real exchange rate raise uncertainty about profits to be made which exert significant negative effects on exports both in the short- and long-run. Our results also show that improvements in the terms of trade (represented by declines in the real exchange rate) and real foreign income exert positive effects on export activity. Most importantly, we found that the trade liberalization and economic reform policies implemented in the post-1986 structural adjustment period contributed to Nigeria's export performance. Overall, our findings suggest that Nigeria's exporting activities can be further boosted by policies aimed at achieving and maintaining a stable competitive real exchange rate.