Fiscal and monetary policy dynamism in the Sub-Saharan Africa frontier markets
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Date
2015-04-17
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University of Ghana
Abstract
This paper investigates the relationship between fiscal and monetary
policies on economic growth using countries within the Sub-Saharan
Africa Frontier Markets (SSAFMs). In other words, the paper explors
the dynamism of fiscal and monetary policy on economy growth in the
Sub-Saharan Frontier Markets (SSAFMs). A balanced panel of five
countries in the SSAFMs, for a period of 28 years (1985-2012), were
used for the estimation. The Granger Causality test as well as the
causality testing procedure due Dumitrescu-Hurlin (D-H) was used to
establish causalities. To analyze the relationship between fiscal and
monetary policy measures on growth the pooled mean group (PM G)
estimates and the mean group (MG) estimator results were computed.
The study finds that that monetary policy (Granger) causes fiscal
policy; stated differently, monetary policy has been the dominant
force accommodating the challenging fiscal stance in the SSAFM.
Future studies could focus on the effect of macro-prudential policies
on economic growth. It is recommended that appropriate monetary
policies could be used to address the vulnerabilities that may arise out
of the integration of the SSAFMS into the global financial market. The
main value of this paper is to empirically project the dynamism of
fiscal and monetary policy on economy growth in the Sub-Saharan
Frontier Markets (SSAFMs)
Description
School of social sciences colloquium
Keywords
pooled mean group (PMG), mean group (MG), Sub-Saharan Africa Frontier Markets (SSAFMs), economic growth