The trend and impact of terms of trade shocks on the overall macroeconomic behaviour have been a recurring issue in the open market economy and have strong implication in designing and implementing development strategies and policies. There has been a growing research programme examining the link between domestic economic activity and trade shocks. Some studies conclude that trade shocks play an important role in driving macroeconomic fluctuations. Others find that trade disturbances account for only a small fraction of the variation in output. Recognizing the existing literature, this current study extends the frontier of the knowledge on the nexus between terms of trade and macroeconomic performance by examining the impact of terms of trade shocks on macroeconomic performance in ECOWAS generally and in WAMZ and WAEMU using a panel vector autoregressive (PVAR) model. ECOWAS economy has been plagued by twin problems of adverse terms of trade shock and poor macroeconomic environment. What does this scenario portend for African economy in general and the ECOWAS sub-region in particular, since terms of trade is one of the most important relative prices in economics? This study, therefore examined the effects of terms of trade shock on the macroeconomic performance in ECOWAS on one hand and the reversed effect of these macroeconomic variables on terms of trade shocks. In line with our objectives, four research hypotheses were test. We decomposed the ECOWAS economy into two financial blocs (West Africa Monetary Zone and West Africa Economic and Monetary Union), and then assessed the responsiveness of macroeconomic variables to terms of trade shock in these blocs; and also the responsiveness of terms of trade shock to a unit shock in macroeconomic variables. The study adopted the restricted PVAR model with application of impulse response analysis and variance decomposition test and covers the period from 1990 to 2015.
Inhaltsverzeichnis (Table of Contents)
- Chapter One: Introduction
- 1.1 Background to the Study
- 1.2 Statement of the Problem
- 1.3 Research Questions
- 1.4 Objectives of the Study
- 1.5 Research Hypotheses
- 1.6 Significance of the Study
- 1.7 Scope and Limitation of Study
- Chapter Two: Review of Related Literature
- 2.1 Preamble
- 2.2 Theoretical Literature Review
- 2.3 Empirical Literature Review
- 2.4 Justification of Study
- Chapter Three: Research Method
- 3.1 Preamble
- 3.2 Theoretical Framework
- 3.3 Model Specification
- 3.4 Estimation Technique and Procedure
- 3.5 Evaluation of Estimates
- 3.6 Test of Research Hypotheses
- 3.7 Nature and Source of Data
- Chapter Four: Data Presentation, Analyses and Discussion of Findings
- 4.1 Preamble
- 4.2 Data Presentation
- 4.3 Data Analysis
- 4.4 Evaluation of Estimates/Research Hypotheses
- 4.5 Discussion of Findings
- Chapter Five: Summary of Findings, Conclusion and Recommendations
- 5.1 Preamble
- 5.2 Summary of Findings
- 5.3 Conclusion
- 5.4 Recommendations
- 5.5 Contributions of the Study to Knowledge
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis aims to investigate the impact of terms of trade shocks on the macroeconomic performance of ECOWAS member states. It seeks to analyze the relationship between these shocks and key macroeconomic variables, providing insights into the transmission mechanisms and policy implications.
- Impact of Terms of Trade Shocks on Macroeconomic Performance
- Transmission Mechanisms of Terms of Trade Shocks
- Empirical Analysis of the Relationship between Terms of Trade and Macroeconomic Variables in ECOWAS
- Policy Implications for Economic Stability in ECOWAS Member States
- Evaluation of Existing Theoretical and Empirical Literature on Terms of Trade Shocks
Zusammenfassung der Kapitel (Chapter Summaries)
Chapter One: Introduction: This chapter sets the stage for the research by providing background information on terms of trade shocks and their significance in the context of ECOWAS member states. It clearly defines the research problem, outlining the specific macroeconomic variables under investigation. The research questions and objectives are articulated, focusing on analyzing the impact and transmission mechanisms of terms of trade shocks. Hypotheses are formulated, and the chapter concludes by outlining the study's scope and limitations.
Chapter Two: Review of Related Literature: This chapter delves into a comprehensive review of existing theoretical and empirical literature related to terms of trade shocks and their effects on macroeconomic performance. It systematically explores various theoretical frameworks that attempt to explain the relationship between external shocks and economic outcomes. The review of empirical studies provides a critical analysis of previous research, highlighting methodological approaches, findings, and any existing controversies or gaps in the literature. The chapter culminates in justifying the current study by explicitly stating how it addresses the shortcomings or extends the existing body of knowledge.
Chapter Three: Research Method: This chapter details the methodological approach employed in the study. It outlines the theoretical framework guiding the empirical analysis, including the specific econometric model used. The chapter thoroughly explains the estimation techniques and procedures adopted to analyze the data, justifying the choices made based on their appropriateness for the research questions. It carefully describes the data sources, variables used, and the methods employed to test the hypotheses formulated in the introductory chapter. This section provides a clear and transparent account of the research design.
Chapter Four: Data Presentation, Analyses and Discussion of Findings: This chapter presents the results of the empirical analysis. It starts with a presentation of the data, offering descriptive statistics and visualizations to provide context. The analysis section elaborates on the econometric findings, interpreting the estimated coefficients and statistical significance of the variables. The chapter then offers a comprehensive discussion of the findings, relating them back to the research questions and hypotheses. The interpretation connects the empirical results to the theoretical framework and existing literature. It explains any unexpected results or limitations in interpreting the findings.
Schlüsselwörter (Keywords)
Terms of Trade Shocks, Macroeconomic Performance, ECOWAS, Impulse Response Functions, Variance Decomposition, Vector Autoregression (VAR), Economic Growth, Inflation, Exchange Rates, External Debt, Policy Implications.
Frequently Asked Questions: Comprehensive Language Preview
What is the subject of this research?
This research investigates the impact of terms of trade shocks on the macroeconomic performance of ECOWAS member states. It analyzes the relationship between these shocks and key macroeconomic variables, exploring transmission mechanisms and policy implications.
What are the key themes explored in this research?
Key themes include the impact of terms of trade shocks on macroeconomic performance, the transmission mechanisms of these shocks, empirical analysis of the relationship between terms of trade and macroeconomic variables in ECOWAS, policy implications for economic stability in ECOWAS member states, and a critical evaluation of existing theoretical and empirical literature on terms of trade shocks.
What is the structure of the research document?
The document is structured into five chapters. Chapter One provides an introduction, including background, problem statement, research questions, objectives, hypotheses, significance, and scope. Chapter Two reviews related literature, both theoretical and empirical. Chapter Three details the research methodology, including the theoretical framework, model specification, estimation techniques, data sources, and hypothesis testing. Chapter Four presents, analyzes, and discusses the findings. Finally, Chapter Five summarizes the findings, offers conclusions, makes recommendations, and highlights contributions to knowledge.
What specific macroeconomic variables are examined?
While not explicitly listed in the provided preview, the research examines the relationship between terms of trade shocks and various key macroeconomic variables. These variables are likely to include, but are not limited to, economic growth, inflation, exchange rates, and external debt.
What methodologies are employed in this research?
The research employs econometric modeling, specifying a model (details not provided in preview) and using estimation techniques to analyze the data. The preview mentions Vector Autoregression (VAR) as a potential technique, and analysis will include impulse response functions and variance decomposition.
What are the sources of data used in this study?
The specific data sources are not detailed in this preview, but Chapter Three of the full document would provide this information.
What are the key findings of this research (as previewed)?
The preview does not present the specific findings, as this is detailed in Chapter Four. However, Chapter Four will present the results of the empirical analysis, interpreting coefficients and statistical significance of variables, relating them back to the research questions and hypotheses.
What are the key conclusions and recommendations of this research (as previewed)?
The specific conclusions and recommendations are not detailed in this preview, as this is found in Chapter Five. However, Chapter Five will summarize findings, provide conclusions based on the empirical analysis, and suggest policy recommendations based on the research results.
What are the keywords associated with this research?
Keywords include: Terms of Trade Shocks, Macroeconomic Performance, ECOWAS, Impulse Response Functions, Variance Decomposition, Vector Autoregression (VAR), Economic Growth, Inflation, Exchange Rates, External Debt, Policy Implications.
- Quote paper
- Uzodigwe Anthony (Author), 2017, Terms of Trade Shocks and Macroeconomic Performance. Evidence from Ecowas Member States, Munich, GRIN Verlag, https://www.grin.com/document/382040
