PLACING EASTERN AND SOUTHERN AFRICA UNDER THE LENS TO IDENTIFY THE DETERMINANTS OF MONETARY AND FISCAL POLICY

Abstract

Despite being home to both some of the world's fastest emerging markets and a number of the poorest. The East and Southern Africa region exhibits noticeably a variety of levels of economic development either nationally or internationally. The region never attracted enough attention from the economist and policymakers. As a result, the current study placed Eastern and Southern African nations under the microscope to explore the determinants of monetary and fiscal policy during the period from 1990 to 2020. In addition, to carry on with the empirical findings a quantile regression and generalized linear model were performed. The study's findings indicate that elements like tax revenue and exportation have a significant impact on monetary policy, whereas interest rates, the labor force, exports, imports, and tax revenue have a significant impact on fiscal policy. In conclusion, it is important to highlight that in Eastern and Southern Africa, macromicroeconomic factors appear to be affecting fiscal policy in contrast with the monetary policy, which is only influenced by exportation and tax revenue. The study advances empirical research in the field of economic development and offers information to decision-makers and the African community about how to manage monetary and fiscal policy in accordance with national needs.

Keywords

• Monetary Policy
• Fiscal Policy
• Economic Development
• Eastern and Southern Africa

PARA VE MALİYE POLİTİKASININ BELİRLEYİCİLERİNİ BELİRLEMEK İÇİN DOĞU VE GÜNEY AFRİKA'NIN MERCEK ALTINA YERLEŞTİRİLMESİ

Abstract

Hem dünyanın en hızlı gelişen pazarlarından bazılarına hem de en yoksullarından bazılarına ev sahipliği yapmasına rağmen. Doğu ve Güney Afrika bölgesi, hem ulusal hem de uluslararası düzeyde fark edilir derecede çeşitli ekonomik gelişme seviyeleri sergilemektedir. Bölge, ekonomistler ve politika yapıcılardan hiçbir zaman yeterince ilgi görmedi. Sonuç olarak, mevcut çalışma, 1990'dan 2020'ye kadar olan dönemde para ve maliye politikasının belirleyicilerini araştırmak için Doğu ve Güney Afrika ülkelerini mikroskop altına yerleştirdi. Ayrıca ampirik bulgulara devam etmek için kantil regresyon ve genelleştirilmiş doğrusal model gerçekleştirilmiştir. Çalışmanın bulguları, vergi geliri ve ihracat gibi unsurların para politikası üzerinde önemli bir etkiye sahip olduğunu, faiz oranları, işgücü, ihracat, ithalat ve vergi geliri ise maliye politikası üzerinde önemli bir etkiye sahip olduğunu göstermektedir. Sonuç olarak, Doğu ve Güney Afrika'da sadece ihracat ve vergi gelirlerinden etkilenen para politikasının aksine makro-mikroekonomik faktörlerin maliye politikasını etkilediğini vurgulamak önemlidir. Çalışma, ekonomik kalkınma alanındaki ampirik araştırmaları ilerletmekte ve karar vericilere ve Afrika topluluğuna, ulusal ihtiyaçlara uygun olarak para ve maliye politikasının nasıl yönetileceği hakkında bilgi sunmaktadır.

Keywords

• Para Politikası
• Maliye Politikası
• Ekonomik Kalkınma
• Doğu ve Güney Afrika

References

1. Adefeso, H. A. & Mobolaji, H. I. (2010). The Fiscal-Monetary Policy and Economic Growth in Nigeria: Further Empirical Evidence. Pakistan Journal of Social Sciences, 7(2), 137-142.
2. Akram, T. & Das, A. (2020). Australian Government Bond's Nominal Yields: A Keneysian Perspective. Annals of Financial Economics, 15(01), 1-20.
3. Dirir, S. A. (2023). Placing Eastern and Southern Africa Under the Lens to Identify the Determinants of Monetary and Fiscal Policy. Journal of Economics and Research, 4(1), 1-17.
4. Alagidede, I. P., Ibrahim, M. & Sare, Y. A. (2020). Structural Transformation in The Presence of Trade and Financial Integration in Sub-Saharan Africa. Central Bank Review, 20(1), 21-31.
5. Ali, S., Irum, S. & Ali, A. (2008). Whether Fiscal Stance or Monetary Policy Is Effective for Economic Growth in The Case of South Asian Countries? The Pakistan Development Review, 791-799.
6. Angrist, J. D. & Pischke, J. S. (2009). Mostly Harmless Econometrics: An Empiricist's Companion. Princeton University Press.
7. Aye, G. C. (2021). Effects of Fiscal and Monetary Policy Uncertainty on Economic Activity in South Africa. Advances in Decision Sciences, 25(1), 167-187.
8. Betts, C., Giri, R. & Verma, R. (2016). Trade, Reform, and Structural Transformation in South Korea. USC-INET Research Paper, 16-20.

9. Berg, A., Funke, N., Hajdenberg, A., Lledo, V. D., Ossowski, R., Schindler, M. & Yackovlev, I. (2009). Fiscal Policy in Sub-Saharan Africa in Response to The Impact of The Global Crisis.
10. IMF Staff Position Notes, 2009(010).
11. Bonga-Bonga, L. (2019). Fiscal Policy, Monetary Policy and External Imbalances: Cross-Country Evidence from Africa's Three Largest Economies. The Journal of International Trade & Economic Development, 28(2), 123-136.
12. Carraro, A. & Karfakis, P. (2018). Institutions, Economic Freedom, and Structural Transformation in 11 Sub-Saharan African Countries. Working Paper, 18-01.
13. Corsetti, G., Kuester, K., Meier, A. & Müller, G. J. (2013). Sovereign Risk, Fiscal Policy, and Macroeconomic Stability. The Economic Journal, 123(566), 1-55.
14. Du Plessis, S., Smit, B. & Sturzenegger, F. (2007). The cyclicality of monetary and fiscal policy in South Africa since 1994. South African Journal of Economics, 75(3), 391-411.
15. Gete, P. & Melkadze, G. (2018). Aggregate Volatility and International Dynamics. The Role of Credit Supply. Journal of International Economics, 111, 143-158.
16. Havi, E. D. K. & Enu, P. (2014). The Effect of Fiscal Policy and Monetary Policy on Ghana’s Economic Growth: Which Policy is more Potent. International Journal of Empirical Finance, 3(2), 61-75.
17. Jawaid, S. T., Arif, I. & Naeemullah, S. M. (2010). Comparative Analysis of Monetary and Fiscal Policy: A Case Study of Pakistan. Nice Research Journal, 3, 58-67.
18. Jha, R. & Afrin, S. (2017). Pattern and Determinants of Structural Transformation in Africa. In Macroeconomic Policy Framework for Africa's Structural Transformation. Palgrave Macmillan, Cham, (63-95).
19. Kaminska, I. & Roberts-Sklar, M. (2018). Volatility in Equity Markets and Monetary Policy Rate Uncertainty. Journal of Empirical Finance, 45, 68-83.
20. Kibwe, Z. W. (2016). The Efficacy of Monetary and Fiscal Policies in East Africa: An Empirical Investigation. Doctoral Dissertation, National Graduate Institute for Policy Studies.
21. Koenker, R. & Bassett Jr, G. (1978). Regression Quantiles. Econometrica: Journal of The Econometric Society, 33-50.
22. Leeper, E. M. (1991). Equilibria Under ‘Active and ‘Passive Monetary and Fiscal Policies. Journal of Monetary Economics, 27(1), 129-147.
23. Mansouri, B. (2008, November). Fiscal Policy and Economic Growth: Egypt, Morocco and Tunisia Compared. In Proceeding in UNECA Conference on: Macroeconomic policy, productive capacity and economic growth in Africa. Addis Ababa, 4(3), 23-30).
24. Martins, P. M. (2019). Structural Change: Pace, Patterns, and Determinants. Review of Development Economics, 23(1), 1-32.
25. Dirir, S. A. (2023). Placing Eastern and Southern Africa Under the Lens to Identify the Determinants of Monetary and Fiscal Policy. Journal of Economics and Research, 4(1), 1-17.
26. Montiel, P., Adam, C. S., Mbowe, W. & O'Connell, S. (2012). Financial Architecture and the Monetary Transmission Mechanism in Tanzania.
27. Mugume, A. (2009). Monetary Transmission Mechanisms in Uganda. Editorial Board. The Bank of Uganda Journal, 4(1).
28. Mwega, F. (2011). The Competitiveness and Efficiency of The Financial Services Sector in Africa: A Case Study of Kenya. African Development Review, 23(1), 44-59.
29. Nwaogwugwu, I. & Evans, O. (2016). A Sectoral Analysis of Fiscal and Monetary Actions in Nigeria. The Journal of Developing Areas, 50(4), 211-229.
30. Royston, P. (1992). Approximating The Shapiro-Wilk W-test for Non-Normality. Statistics and Computing, 2(3), 117-119.
31. Samuel, U. D. & Oruta, I. L. (2021). Government Expenditure and Economic Growth in Nigeria: A Disaggregated Analysis. Path of Science, 7(11), 4022-4035.
32. Van Neuss, L. (2019). The Drivers of Structural Change. Journal of Economic Surveys, 33(1), 309- 349.
33. Woodford, M. & Walsh, C. E. (2005). Interest and Prices: Foundations of A Theory of Monetary Policy. Macroeconomic Dynamics, 9(3), 462-468.