[go: up one dir, main page]
More Web Proxy on the site http://driver.im/
IDEAS home Printed from https://ideas.repec.org/a/bla/worlde/v43y2020i1p239-273.html
   My bibliography  Save this article

The emergence of regional business cycle in Africa—a reality or myth? A Bayesian dynamic factor model analysis

Author

Listed:
  • Oyeyinka S. Omoshoro‐Jones
  • Lumengo Bonga‐Bonga
Abstract
This paper examines the evolution and the underlying forces of the business cycle co‐movements among seven African (A‐7) countries over the period 1970–2016. These countries accounted for over 60% of regional GDP, have abundant natural resources, access to the global capital market and widely viewed as potential drivers of regional (or “African”) business cycle. We model the national business cycle using real output, consumption and investment. We employ a dynamic factor model to decompose fluctuations in these macro‐variables into a regional, country‐specific and idiosyncratic components using Bayesian methods. We also analyse the relative importance of some notable drivers of business cycle fluctuations found in the literature. We find that the idiosyncratic component is dominating cyclical fluctuations in the A‐7 countries, while country‐specific and regional factors play a negligible role suggesting the inexistence of a common regional cycle despite deepening intra‐African trade. Among the driving variables, the terms‐of‐trade shocks exert greater influence on the A‐7 business cycle, while exchange rate movements and changes in money supply explain sizeable fluctuations in consumption and investment in most of the A‐7 countries. Shocks associated with changes in relative domestic oil prices, monetary and fiscal policies cause large output fluctuations.

Suggested Citation

  • Oyeyinka S. Omoshoro‐Jones & Lumengo Bonga‐Bonga, 2020. "The emergence of regional business cycle in Africa—a reality or myth? A Bayesian dynamic factor model analysis," The World Economy, Wiley Blackwell, vol. 43(1), pages 239-273, January.
    • Handle: RePEc:bla:worlde:v:43:y:2020:i:1:p:239-273
    DOI: 10.1111/twec.12888
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/twec.12888
    Download Restriction: no
    File URL: https://libkey.io/10.1111/twec.12888?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oyenyinka Sunday Omoshoro‐Jones & Lumengo Bonga‐Bonga, 2022. "Intra‐regional spillovers from Nigeria and South Africa to the rest of Africa: New evidence from a FAVAR model," The World Economy, Wiley Blackwell, vol. 45(1), pages 251-275, January.
    2. Krzysztof Beck & Ntokozo Patrick Nzimande, 2023. "Labor mobility and business cycle synchronization in Southern Africa," Economic Change and Restructuring, Springer, vol. 56(1), pages 159-179, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:43:y:2020:i:1:p:239-273. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.