N’Yilimon NANTOB

Abstract

This paper examines the empirical importance of multiplicative parameter uncertainty on the conduct of the Central Bank of Nigeria’s monetary policy over the period 1980Q1–2015Q1. Theoretically, the certainty equivalence principle indicates that the optimal policy is not affected by the degree of uncertainty called “additive”. However, the “Brainard conservatism principle” states that under uncertainty about the transmission mechanism, monetary policy should be less aggressive than in certainty universe. We show in this study that the Brainard principle can be challenged not only by the choice of the model used but also by the preferences of the central bank. Using the framework of a parameterized model with parsimony of IS curve-Phillips curve-type and a simple rule, and the linear quadratic stochastic control approach by introduction the variance of the estimated parameters in the optimal control theory the results yield that the central banker are always very cautious when they have an inflation and output stabilization objective. However, when they are concerned to smooth interest rate, their behavior becomes more aggressive, with a degree of aggressiveness that depends in part on the objective of interest rate smoothing.

Keywords: Optimal monetary policy, Parameter uncertainty, Brainard conservatism principle, Interest rate smoothing, Nigeria.

JEL classification: E43, E52, E58.

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Eseosa Joy Sowemimo and Milton Iyoha, Ph D

ABSTRACT

Foreign aid is considered a crucial tool for lifting African countries out of poverty and for fast tracking their economic and social development. Nigeria has the highest official development Assistance receipts in Africa but despite this, her macroeconomic performance is largely underwhelming. Existing literature is divided on the effectiveness or otherwise of aid in propelling growth. This paper investigates this issue using data from Nigeria. Interestingly, analysis from this study found a “U” shaped curve which implies that the benefit from aid is first negative before it becomes positive. The study posits that the reason for this peculiar aid-growth relationship in Nigeria is the rigidities in our macroeconomic and institutional frameworks. The study rather emphasizes government expenditure as a veritable tool for driving growth. It  concludes that if government  expenditure is channelled towards boosting domestic savings and investment as well as used for funding human capital development projects, it is likely that foreign aid will become an additional source of funding that can produce a significantly positive effect on the growth rate of the Nigerian economy.

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Baba N. Yaaba   Abstract The importance of inclusive financing to inclusive growth is no more in doubt. Thus, the Central Bank of Nigeria developed a financial inclusion strategy in 2012 to reduce the percentage of adult Nigerians excluded from the formal financial services so as to enable them contribute to the growth and development […]

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Joseph Ayoola Omojolaibi and Monday Kingsley Oserei

Abstract

Fiscal sustainability is very important for macroeconomic stability, monetary policy effectiveness and the pursuit of economic growth. The current study accesses fiscal sustainability and growth dynamics in West Africa Monetary Zone (WAMZ). The literature on the issue of public debt considers it sustainable if the growth of debt is not greater than the growth of Gross Domestic Product (GDP). The study applies Panel data using the Hausman Test, Cointegration and Granger Causality methodologies were also used to evaluate fiscal processes in these WAMZ countries. A model for testing the sustainability of fiscal policy was also developed, based on the Intertemporal budget constraint while the outcome shows that fiscal policy in WAMZ countries is weakly sustainable which led to the recommendation that WAMZ countries should strengthen their fiscal performance.

Keywords: Fiscal Sustainability, Growth Dynamics, WAMZ, Panel Data Estimation,

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          Lionel Effiom and Peter Ubi

Abstract

This paper investigates the relative impact of domestic resource mobilisation (DRM) on the industrial sectors of Ghana and Nigeria. Three variables – remittances, tax revenue, and savings – were used to capture the DRM phenomenon. Employing the ARDL bounds testing procedure, findings indicate that all DRM variables had significant but varying effects on industrial sector performance in both countries. While remittances and tax revenues impacted positively on Ghana’s industrial output, they had opposite effect on Nigeria’s. Conversely, while savings had a benevolent impact on Nigeria’s industrial output, the same could not be said of Ghana’s. Furthermore, the two economies are plagued by deficient institutional capacity to mobilize local resources and deploy same to their industrial sectors. The study recommends, inter alia, the securitisation of future remittances by banks for critical infrastructure and developmental projects.

Keywords: DRM, Industrial Sector, Nigeria, Ghana

JEL Classification: D78, E22 and F65.

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Estelle Amani Konan

RESUME

L’objectif de cette étude est de réexaminer la relation développement financier – croissance économique dans l’UEMOA sur la période 1990-2015. Respectivement par l’estimation d’un panel à effet aléatoire panel et par la méthode des MCO, nous estimons le modèle de croissance avec secteur bancaire et le modèle de croissance avec marché financier. Les résultats montrent qu’il existe une relation non linéaire entre le développement financier et la croissance économique dans l’UEMOA. Alors, comme perspectives de développement du marché financier de l’UEMOA, nous analysons la possibilité d’une intégration financière internationale de l’UEMOA en déterminant l’impact de l’intégration financière internationale sur le développement financier et sur la croissance économique. Les résultats des estimations par la méthode des variables instrumentales (IV) et par les MCO nous donnent des résultats ambigus qui montrent qu’une intégration financière internationale est très risquée et qu’il est préférable d’aller vers une intégration financière régionale au sein de la CEDEAO.

Mots clés : intégration financière, développement financier, secteur bancaire, marché boursier, croissance économique

Classification JEL : E44, G15, F36

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Oziengbe Scott Aigheyisi

Abstract

The paper employs the DOLS estimation technique to investigate the effect of FDI on domestic investment in Nigeria. The effects of interactions between FDI and financial system development and, FDI and secondary school enrolment (proxy for human capital) are also investigated. The empirical evidence indicates that the effect of FDI on domestic investment is positive, but not statistically significant. It however finds that when interacted with financial system development, FDI positively and significantly affects domestic investment. The study also finds that the effect of interaction between FDI and secondary school enrolment on domestic investment is negative. This is indicative of existence of a threshold level of human capital development required for FDI to positively affect domestic investment. Further evidence from the study are that low rate of inflation is favourable to domestic investment whereas high rate of inflation adversely affects domestic investment. Trade openness is also observed to negatively affect domestic investment in the country. Policy recommendations emanating from the study include proper regulation of the financial system to enhance its development, efforts by the government to improve the quality and functionality of secondary education in the country, targeting low inflation rate and infant industry protection.

Keywords: Foreign Direct Investment, Financial System Development, Human Capital, Inflation, Trade Openness, Domestic Investment, DOLS

JEL Classification Codes: E22, E24, E31, E44, F21, F43, I26, P33, P45.

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Moses K. Tule, S.A. Abdulsalam, C.C. Chiemeke   Abstract This paper investigates world oil prices, volatility transmission, hedging and the stock market in ECOWAS countries. The study employs Constant Conditional Correlation CCC model and VAR-GARCH model and the bivariate form of multivariate GARCH models. The study found that the return spillover from stock price to […]

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Temidaya O. Akinbobola Akinlo, Taiwo

Abstract

This study examined the impact of fiscal policy on current account in sub-Saharan Africa for the period of 1980-2015. The study used pooled OLS, Fixed effect and Dynamic GMM techniques for the analysis. We examine the relationship between fiscal policy and current account in 21 sub-Saharan African countries. We also examine the impact of fiscal policy on current account in 9 oil producing countries and 11 non-oil producing countries in sub-Saharan Africa to see if the fiscal policy will exact different impact on current account due to the effect of oil price volatility on oil producing countries. In the full sample and non-oil producing countries, the results show that fiscal policy proxy by government consumption has negative and significant impact on current account.  In the oil producing countries, the results show that an increase in government consumption could not exalt significant impact on current account due to the saving of proceed of oil boom and reinvest it in abroad. In all the estimations both in the full sample, non-oil and oil producing countries the results show that increase in investment and interest rate worsen the situation of the current account. while increase in GDP growth improve current account significantly.

Keywords: current account, fiscal policy, sub-Saharan Africa, panel data, Dynamic GMM

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Hassan O.  Ozekhome

Abstract

Determining an appropriate exchange rate regime that enhances macroeconomic performance and macroeconomic stability is a viable policy strategy for accelerating greater economic integration, particularly given the current state of affairs, regarding the proposed single currency drive for West Africa. It is against this backdrop that this paper empirically investigates the determinants of the choice of exchange rate regime in the WAMZ over the period 19995-2015. It reviews the key empirical and policy issues associated with it, and assess the state of play in the debate, as well as the costs and benefits of each regime. Adopting a multinomial logit regression model, the empirical results reveal that growth rate of real GDP, domestic openness, foreign reserves, government consumption, inflation rate and inflation variability are significant variables that influence the choice of exchange rate regime in the WAMZ at any point in time or across time. The paper recommends amongst others; the adoption of sound monetary and fiscal policies in the zone in order to enhance macroeconomic performance, increase policy coordination and harmonization, strong political will and commitment, and legal and institutional structures that will facilitate the long-run goal of monetary union in the WAMZ.

Keywords: Exchange rate regimes, Convergence, Optimum currency areas, Policy coordination.

JEL Classification: F02, F31

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