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Publication Details
AFRICAN RESEARCH NEXUS
SHINING A SPOTLIGHT ON AFRICAN RESEARCH
economics, econometrics and finance
External shocks and persistence of external debt in open vulnerable economies: The case of Africa
Economic Modelling, Volume 28, No. 4, Year 2011
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Description
We examine the extent to which two external shocks, the world interest rate shock and the commodity price shock, lead to external debt accumulation in Africa. We begin by estimating a dynamic stochastic general equilibrium model of external debt burden, and solve the linear equations using the quadratic method of undetermined coefficients. Consequently, we run simulations of 50 time periods. Our results show that both world commodity price and world interest rate shocks impact external debt accumulation in the majority of our sample African countries. Interestingly, world commodity price shocks lead to an increase in external debt while world interest rate shocks appear to discourage accumulation of external debt. © 2011 Elsevier B.V.
Authors & Co-Authors
Muhanji, Stella Isendi
South Africa, Johannesburg
University of the Witwatersrand
Kenya, Nakuru
Kabarak University
Ojah, Kalu
South Africa, Johannesburg
University of the Witwatersrand
Statistics
Citations: 32
Authors: 2
Affiliations: 2
Identifiers
Doi:
10.1016/j.econmod.2011.02.020
ISSN:
02649993