PUBLIC SPENDING AND REAL EXCHANGE RATE INSTABILITIES AND GROWTH IN AFRICA: EVIDENCE FROM PANEL DATA

Oumar Diallo ()
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Oumar Diallo: United Nations

Journal of Economic Development, 2007, vol. 32, issue 2, 69-92

Abstract: The paper investigates the causes of Africa¡¯s poor growth performance. It therefore focuses on the strand of literature that highlights the role of policy instability and uses the dependent economy model as the main theoretical framework. Results from the empirical work indicate that public spending instability increases real exchange rate instability, which in turn exerts a negative impact on both investment and total factor productivity. Further, the empirical investigation suggests partially that real exchange rate appreciation contributes to the decline of sectors with important positive externalities, thereby leading to persistent productivity losses and weak economic growth.

Keywords: Africa; Economic Growth; Macroeconomic Policy; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 E6 O4 O55 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:32:y:2007:i:2:p:69-92

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