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

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posted on 2014-01-23, 15:10 authored by Ahmad Hassan AhmadAhmad Hassan Ahmad, Eric PentecostEric Pentecost
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.

History

School

  • Business and Economics

Department

  • Economics

Citation

AHMAD, A.H. and PENTECOST, E.J., 2012. Identifying aggregate supply and demand shocks in small open economies: empirical evidence from African countries. International Review of Economics and Finance, 21 (1), pp. 272 - 291.

Publisher

© Elsevier

Version

  • AM (Accepted Manuscript)

Publication date

2012

Notes

This article was published in the journal, International Review of Economics and Finance [© Elsevier]. The definitive version is available at: http://dx.doi.org/10.1016/j.iref.2011.08.004

ISSN

1059-0560

Language

  • en

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