Macroeconomic Volatility and Economic Growth: Evidence from Selected African Countries

Chukwuemeka Onyimadu

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the relationship between macroeconomic volatility and long run economic growth in a panel of 40 African countries over the period 1980 – 2014. The paper re – examines the postulates of both Ramey and Ramey (1995) – where investment was the primary link between volatility and growth - and Aghion et al (2005) – where financial credit constraints was the primary link - , that there is a negative and significant correlation between macroeconomic volatility and long run economic growth. The findings in the paper refutes this negative relationship between volatility and economic growth, with the conclusion that there exist a significant and positive correlation between volatility and economic growth with reference to the sample data set used. The findings of this paper are robust to controls for investment, different and appropriate measures of financial development, level of openness, government size and each countries initial level of real per capita GDP.

Keywords: Macroeconomic Volatility; Economic Growth; Financial Development; Investment (search for similar items in EconPapers)
JEL-codes: E6 G1 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-afr and nep-mac
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Published in Journal of Economics and Business Sciences 2.3(2016): pp. 17-28

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:77200

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