Spillovers From the Rest of the World Into Sub-Saharan African Countries
IMF Working Papers, July 1, 2009
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Bibliographic details
- Published: July 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873023.001
Summary / Objective
- Investigates the impact of a global slowdown on individual Sub-Saharan African countries.
- Uses dynamic panel regressions relating real growth in domestic output to:
- world growth in trade weighted by partner countries,
- control variables: oil prices, non-oil prices, financial variables, and country fixed effects.
- Estimates are applied to prepare country-specific simulations.
- Model is shown to estimate well out-of-sample spillover effects in the region.
Methodology
- Empirical approach: series of dynamic panel regressions for countries in the region.
- Key regressors:
- world growth in trade (trade-weighted by partner countries),
- oil prices,
- non-oil prices,
- financial variables (including the spread of three-month Libor to US treasury bills),
- country fixed effects.
- Novelty: application of the spread of three-month Libor to US treasury bills as a proxy for external financial conditions for countries in the region.
Key Findings and Analysis
- Countries in the region are significantly affected by:
- lower external demand for their exports,
- declines in commodity prices and the terms of trade,
- tighter financial conditions abroad.
- The financial-conditions channel is proxied by the spread of three-month Libor to US treasury bills; this is among the first applications of such a measure for countries in the region.
- The model performs well in out-of-sample estimation of spillover effects for the region.
Subjects and Keywords (as stated)
- Subject: Commodity price fluctuations, Commodity prices, Exports, International trade, Oil prices, Prices, Terms of trade
- Keywords: Africa, commodity export price, Commodity price fluctuations, commodity prices, export price, Exports, financial linkages, Global, Growth spillovers, income reduction, oil price shock, Oil prices, panel estimate, price, Sub-Saharan Africa, Terms of trade, terms of trade effect, terms of trade shock, world growth, WP