Identifying aggregate supply and demand shocks in small open economies: empirical evidence from African countries

A. H. Ahmad, Eric J. Pentecost

Research output: Contribution to journalArticle

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Abstract

This paper uses a tri-variate structural VAR with a long-run identification scheme, akin to the Blanchard and Quah method, to identify external and domestic supply and demand shocks in 22 African countries between 1980 and 2005. Domestic supply shocks are found to be the most important factor contributing over 70% to output fluctuations in these countries, with external shocks playing a relatively minor role. A partial correlation analysis between the identified shocks and a measure of the fiscal policies of the countries revealed that the fiscal policies pursued by most of the countries during the period are counter-cyclical.
LanguageEnglish
Article number23
Pages272-291
Number of pages20
JournalInternational Review of Economics and Finance
Volume21
Issue number1
DOIs
StatusPublished - Jan 2012

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Fiscal policy
Supply shocks
Demand shocks
Empirical evidence
African countries
Small open economy
External shocks
Structural VAR
Output fluctuations
Correlation analysis
Factors

Cite this

Identifying aggregate supply and demand shocks in small open economies : empirical evidence from African countries. / Ahmad, A. H.; Pentecost, Eric J.

In: International Review of Economics and Finance, Vol. 21, No. 1, 23, 01.2012, p. 272-291.

Research output: Contribution to journalArticle

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