How effective are countercyclical policy tools in mitigating the impact of financial and economic crises in Africa?

Amarakoon Bandara

Journal of Policy Modeling, 2014, vol. 36, issue 5, 840-854

Abstract: Using panel vector auto regression (PVAR) and GMM estimates we provide evidence for the transmission of financial crises to African economies through foreign direct investments and exports. Although many countries resort to stimulus packages to mitigate the impacts of financial crises, we find no evidence for fiscal policy to be considered an effective countercyclical policy tool in the African context. Monetary policy could be an effective tool in mitigating the impact in non-resource rich SSA countries, but not in others. Limited policy space calls for African economies to reconsider their policies towards trade, investment, finance and macroeconomic management.

Keywords: Financial crisis; Transmission; Fiscal stimulus; Monetary policy (search for similar items in EconPapers)
JEL-codes: C23 E23 E53 E63 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:36:y:2014:i:5:p:840-854

DOI: 10.1016/j.jpolmod.2014.08.003

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