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Article
Publication date: 12 July 2023

Adamu Braimah Abille and Oytun Meçik

Motivated by recent rapid exchange rate depreciations, shrank economic growth, high inflation, and persistent trade deficits, this study examines the trade balance (TB) in the…

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Abstract

Purpose

Motivated by recent rapid exchange rate depreciations, shrank economic growth, high inflation, and persistent trade deficits, this study examines the trade balance (TB) in the face of the recent dynamics of the stated macroeconomic factors, which are also important determinants of the TB. The symmetric test of the J-curve phenomenon for the selected Sub-Saharan African (SSA) countries is revisited in this regard. The study uses panel data from 1970 to 2020 for ten of these countries for the longitudinal panel analysis with the TB as the dependent variable and the real exchange rate, foreign and domestic national incomes, and trade openness as the set of independent variables.

Design/methodology/approach

Because the underlying data set involves a heterogeneous panel of relatively short N and long T, the pooled mean group (PMG) and mean group (MG) heterogeneous panel models are employed based on the Hausman test for parameter consistency in heterogeneous panels.

Findings

The findings largely support the domestic income growth– TB worsening and the foreign income growth– TB improvement hypotheses. Trade openness is found to mostly augment the TB performance of the countries. The results also validated the J-curve effect for only 3/10 and 2/10 countries in the PMG and MG models, respectively. The divergence for most of the countries is attributed to possible import compression and institutional structure of SSA countries.

Practical implications

Given the favorable effects of trade openness on the TB performance of SSA countries, it is recommended that SSA countries place much emphasis on import-substitution industrialization and value addition to their natural resources as well as investment-driven growth policies to improve the competitiveness of their exports and reverse the chronic deficits in their TBs.

Originality/value

This paper is unique for invoking heterogeneous panel models to analyze the TB in light of recent dynamics of its determinants, as well as providing an update on the symmetric test of the J-curve phenomenon for the selected SSA countries.

Details

International Trade, Politics and Development, vol. 7 no. 2
Type: Research Article
ISSN: 2586-3932

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Book part
Publication date: 1 March 2022

Oytun Mecik, Ercan Bahtiyar and Mustafa Karabacak

Purpose: COVID-19 pandemic is among the most important events of the 21st Century. Its global character and the multi-dimensional fallouts it has on communities worldwide further

Abstract

Purpose: COVID-19 pandemic is among the most important events of the 21st Century. Its global character and the multi-dimensional fallouts it has on communities worldwide further increase the importance of the pandemic. During the period of more than one year since the declaration of the pandemic, the communities failed to provide a lasting solution other than the face masks, social distance, and hygiene. Failure to fight the pandemic with considerable success subsequently raised the topic of revising the policymakers’ previous predictions at the start of the pandemic based on incomplete information. So, the calendar put forward for the pandemic went forward day by day, and the authorities who failed to adopt a prudent approach were obliged to pay increasingly higher costs for their mistakes. In the chapter, the financial and economic effects of the pandemic in selected countries are examined. While examining the policies followed in these countries, in terms of fiscal stimulus packages and monetary expansion packages, it is aimed to shed light on the pandemic experience in the Turkish economy and to develop policy recommendations. Thus the persistence of the pandemic pushes all countries to update their current policies and seek new methods. This chapter aims to examine developed and emerging economies in the covid-19 era that have implemented policies to struggle with the pandemic and whose policy framework can be accessed.

Methodology: To do this we carried out a literature review of the Economic and Fiscal Effects of COVID-19 Pandemic during 2020 and early 2021.

Findings: Countries like the United States, United Kingdom, and Germany are believed to have taken strong measures to minimize the damages on the economy due to the pandemic, while other countries like Russia, India, and Brazil are deemed to have mounded new policies within the framework of their internal dynamics. One should also note that, in addition to the individual efforts of each European country, the European Union has also played a decisive role in the policies of its member states for crisis management institutionally.

Details

Managing Risk and Decision Making in Times of Economic Distress, Part A
Type: Book
ISBN: 978-1-80117-427-5

Keywords

Available. Content available
Book part
Publication date: 1 March 2022

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Abstract

Details

Managing Risk and Decision Making in Times of Economic Distress, Part A
Type: Book
ISBN: 978-1-80117-427-5

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