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41. Monetary Policy in the CFA Zone: Country-level Credit Policy

Author:
Anja Shortland and David Stasavage
Publication Date:
02-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines whether the BCEAO has made use of the various policy instruments at its disposal for steering credit in the individual CFA zone member countries to complement interest rate policy at the zone level. We estimate whether private sector credit has responded systematically to different monetary policy variables using iterated 3-stage least squares regressions for Burkina Faso, Côte d'Ivoire, Mali, Senegal and Togo. If we constrain the coefficient estimates there is some support for the hypothesis that the BCEAO has contracted private sector credit in response to a higher inflation differential with France. However, there seems to be no policy rule to restrict private sector credit in response to increasing government borrowing from the central bank or increased foreign borrowing. If the coefficient estimates are unconstrained, there does not appear to be any systematic policy to control credit expansion at the domestic level.
Topic:
Economics, International Organization, International Political Economy, and International Trade and Finance
Political Geography:
Africa and France

42. The Costs and Benefits Analysis of CFA Membership: The Choice of an Exchange Rate Regime for the CFA Countries Zone

Author:
Mireille Linjouom
Publication Date:
02-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper determines an analytical framework defining the choice of an optimal exchange rate regime for a typical CFA country. The policymakers behave strategically to decide to adopt alternative exchange rate regime by minimizing their loss function under specific constraints like economic characteristics and political consideration. One concludes a CFA economy with less inflationary propensity and greater external shocks volatility will tend to select a flexible exchange rate regime. Moreover, the model suggests that a CFA country with a more unstable political system and a higher propensity to apply inflationary policies will prefer a flexible arrangement than a fixed one.
Topic:
Economics, International Organization, International Political Economy, and International Trade and Finance
Political Geography:
Africa

43. An Aggregate View of Macroeconomic Shocks in Sub-Saharan Africa: A Comparative Study Using Innovation Accounting

Author:
Simeon Coleman
Publication Date:
02-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper investigates the impacts and responses of macroeconomic shocks in some domestic economies in Sub-Saharan Africa over the period 1961-99; more specifically, it seeks to answer the question of whether there are any systematic differences in the responses of the CFA franc zones and the non-CFA franc zone countries to macroeconomic shocks. Based on the Blanchard-Quah methodology, we identify shocks to the changes in real exchange rate and output using a structural VAR (SVAR) model for these small open economies. Our finding that the real exchange rate innovations in the CFA franc zones are largely independent of domestic variables suggests that external influence is more important in the CFA zones. There is also some evidence that money demand shocks are more significant in the non-CFA franc zone countries.
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
Africa

44. An Inquiry into Cities and Their Role in Subnational Economic Growth in South Africa

Author:
W.F. Krugell and W.A. Naudé
Publication Date:
01-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
South Africa is characterized by significant inequality in spatial economic activity. Whether future growth and development on a subnational level in South Africa will be such as to reduce this inequality may depend on the economic growth and development of South Africa's largest cities. Our local economic growth empirics show some indications of conditional convergence in output between poorer towns as well as overall between all cities and towns. Between 1990 and 2000 some limited sigma convergence was found but this was driven by declines in the standard deviation of per capita income amongst the poorest quintile of towns. An estimate of conditional beta convergence of 1.2 percent over the period 1990-2000 confirms that overall convergence has been taking place. From an estimation of the determinants of economic growth on a local level, using a dataset on 353 local areas in South Africa between 1990-2000 we found the most significant determinants to be stocks of human capital and distance from harbours and markets. The effect of human capital on economic growth was strongly associated with the presence of large cities, as one would predict from endogenous growth theory.
Topic:
Demographics, Development, and Economics
Political Geography:
Africa and South Africa

45. Love Thy Neighbour? Evidence from Ethnic Discrimination in Information Sharing within Villages

Author:
Mattia Romani
Publication Date:
01-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
There is increasing evidence to suggest that a fundamental source of information for farmers on how to access and use new agricultural technologies comes from interacting with neighbours. Economic research on adoption of innovations in a rural context has only partially addressed the issue of how the social structure of a village can affect adoption and the final impact on productivity of farmers. This paper investigates the role of proximity interpreted not only in geographical terms but also along the line of ethnic similarities among neighbours (what we define as 'social proximity'). We use a panel dataset collected in Côte d'Ivoire to define the probability of accessing the knowledge network. The main results indicate that farmers from ethnic minorities are less likely to access, and benefit less from, extension services. But they seem to try to re-equalize their condition by putting more effort than dominant ethnic group neighbours in sharing information among themselves.
Topic:
Agriculture, Demographics, Economics, and Human Welfare
Political Geography:
Africa

46. Economic Growth, Income Distribution and Poverty: Time-series and Cross-country Evidence from the CFA-zone Countries of sub-Saharan Africa

Author:
Michael Bleaney and Akira Nishiyama
Publication Date:
01-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The causes of the slow growth of CFA countries are investigated. There is little difference in this respect between the CFA and other sub-Saharan African countries. Since 1970, GDP growth in the CFA countries has shown no significant trend but one or two medium-term fluctuations (positive in 1979-83 and negative in 1989-93). Internationally, the income share of the poorest 20 per cent of the population of any country has improved most in poor countries, and there is no evidence that this does not apply to CFA countries also.
Topic:
Economics, Human Welfare, International Political Economy, and International Trade and Finance
Political Geography:
Africa

47. How Does Monetary Policy Affect the Poor? Evidence from the West African Economic and Monetary Union

Author:
David Fielding
Publication Date:
01-2004
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The West African Economic and Monetary Union (UEMOA) has a history of monetary stability and low inflation. Nevertheless, there is substantial variation in relative prices within some UEMOA countries, in particular in the price of food relative to other elements of the retail price index (IHPC). Using monthly time-series data for cities within the region, we analyze the impact of changes in monetary policy instruments on the relative prices of components of the IHPC. We are then able to explore how the burden of monetary policy innovations is likely to be shared between the rich and poor.
Topic:
Economics, Human Welfare, International Political Economy, and International Trade and Finance
Political Geography:
Africa

48. Which Types of Aid Have the Most Impact?

Author:
George Mavrotas
Publication Date:
12-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper uses an aid disaggregation approach to examine the impact of different types of aid on the fiscal sector of the aid-recipient country. It uses time-series data on different types of aid (project aid, programme aid, technical assistance and food aid) for Uganda, an important aid recipient in recent years, to estimate a model of fiscal response in the presence of aid which combines aid disaggregation and endogenous aid. The empirical findings clearly suggest the importance of the above approach for delving deeper into aid effectiveness issues since different aid categories have different effects on key fiscal variables—an impact that could not be revealed if a single figure for aid was employed. More precisely, project aid and food aid appear to cause a reduction in public investment whereas programme aid and technical assistance are positively related to public investment. The same applies for government consumption. A negligible impact on government tax and non-tax revenues, and a strong displacement of government borrowing are also found.
Topic:
Economics, International Trade and Finance, and Poverty
Political Geography:
Uganda and Africa

49. Reforms, Remoteness and Risk in Africa: Understanding Inequality and Poverty during the 1990s

Author:
Luc Christiaensen, Lionel Demery, and Stefano Paternostro
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study traces the interactions between economic growth, income inequality and consumption poverty in a sample of African countries during the 1990s. It draws on the much-improved household data sets now available in the region. It finds that experiences have varied: some countries have seen sharp falls in income poverty; others have witnessed marked increases. Economic growth has been 'pro-poor' in that the incomes of poor households have typically grown at similar or faster rates than average income. But the aggregate numbers hide significant and systematic distributional effects which have caused some groups and regions to be left behind. The paper explores the contours of these effects, and draws three key conclusions. First, agricultural market liberalization has been conducive to reductions in rural poverty. Second, market connectedness is crucial for poor producers to take advantage of the opportunities offered by economic growth. Some regions and households by virtue of their sheer remoteness have been left behind when growth picks up. The availability of infrastructure (especially roads) and proximity to markets are crucial. And finally risks, such as rainfall variations and ill health are found to have profound effects on poverty outcomes, underscoring the significance of social protection in poverty reduction strategies in Africa.
Topic:
Economics and Poverty
Political Geography:
Africa

50. Spatial Inequality for Manufacturing Wages in Five African Countries

Author:
Oliver Morrissey and Dirk Willem te Velde
Publication Date:
09-2003
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper uses data on individual earnings in manufacturing industry for five African countries in the early 1990s to test whether firms located in the capital city pay higher wages than firms located elsewhere, and whether such benefits accrue to all or only certain types of workers. Earnings equations are estimated that take into account worker characteristics (education and tenure) and relevant firm characteristics (notably size and whether foreign owned). Any location effect identified is therefore additional to appropriate control variables. There are two main findings. First, we find evidence of a 'pure capital city premium' equivalent to between 12 per cent and 28 per cent of nominal average earnings in the five countries. In some countries this location premium exceeds plausible consumer price differentials, between the capital and other urban areas. This does suggest that real (purchasing power) manufacturing wages are higher in the capital city (although this real premium is no more than ten per cent). Second, we find that skilled workers earn a higher wage premium in the capital city than those less skilled. However, this is not because of location effects on earnings per se, but rather because of other firm characteristics of firms located in the capital city, such as size and foreign ownership. This suggests that spatial inequality in itself does not directly contribute to skilled–less-skilled wage differentials.
Topic:
Economics and Industrial Policy
Political Geography:
Africa