Spillovers from the Rest of the World into Sub-Saharan African Countries

Gustavo Ramirez and Paulo Flavio Nacif Drummond

No 09/155, IMF Working Papers from International Monetary Fund

Abstract: This paper investigates the impact of a global slowdown on individual African countries using a series of dynamic panel regressions for countries in the region, relating real growth in domestic output to world growth in trade weighted by partner countries and several control variables: oil prices, non-oil prices, financial variables, and country fixed effects. Estimates are then applied to prepare country-specific simulations. The model, which is shown to estimate well out-of-sample spillover effects in the region, shows that countries in the region are significantly affected by lower external demand for their exports, declines in commodity prices and the terms of trade, and tighter financial conditions abroad. The last, proxied by the spread of three-month Libor to US treasury bills, is to our knowledge one of the first applications of such a measure of financial conditions for countries in the region.

Keywords: Commodity price fluctuations; Commodity prices; Cross country analysis; Demand; Economic growth; Economic models; Exports; External shocks; Oil prices; Spillovers; Sub-Saharan Africa; Terms of trade (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-dev and nep-fdg
Date: 2009-07-22
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