Multiple Breaks, Terms of Trade Shocks and the Unit-Root Hypothesis for African Per Capita Real GDP
Diego Romero-Ávila ()
World Development, 2009, vol. 37, issue 6, 1051-1068
Summary This paper presents an investigation of the unit root hypothesis for per capita real GDP series in 46 African countries from Maddison (2003) over the period spreading during 1950 and 2001. Toward this end, we employ highly flexible panel techniques which incorporate multiple mean and slope shifts in the output series. Our findings are clearly supportive of regime-wise trend stationarity in output after (1) allowing for cross-dependence and multiple breaks, and (2) removing four countries that exert undue influence on the whole panel. Remarkably, our main results hold true for alternative per capita real GDP proxies retrieved from the Penn World Table 6.2 as well as for different country-groups constructed on the basis of the country's participation in regional integration processes. Interestingly, the timing of the breaks broadly coincides with terms of trade shocks associated with large fluctuations in the price of primary commodities. Based on our results, we draw some policy prescriptions that point to the need for managing adequately terms of trade booms and busts to avoid large swings in Africa's aggregate output.
Keywords: Africa; panel; stationarity; test; multiple; structural; breaks; aggregate; output; terms; of; trade; shocks (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:37:y:2009:i:6:p:1051-1068
Access Statistics for this article
World Development is currently edited by O. T. Coomes
More articles in World Development from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().