nep-afr New Economics Papers
on Africa
Issue of 2008‒04‒12
twelve papers chosen by
Suzanne McCoskey
George Washington University

  1. Monetary Union in West Africa and Asymmetric Shocks: a Dynamic Structural Factor Model By Romain Houssa
  2. Rain and the Democratic Window of Opportunity By Brückner, Markus; Ciccone, Antonio
  3. Improving Policy Credibility: Is There a Case for African Monetary Unions? By Dominique Guillaume; David Stasavage
  4. Forecasting the South African Economy: A DSGE-VAR Approach By Liu, G.; Gupta, R.; Schaling, E.
  5. Estimating Returns to Education in Off-Farm Activities in Rural Ethiopia. By Filip Verwimp
  6. Agricultural Policy, Crop Failure and the 'Ruriganiza' Famine (1989) in Southern Rwanda: a Prelude to Genocide ? By Philip Verwimp
  7. Risk-Sharing Networks among Households in Rural Ethiopia By Daniel Ayalew
  8. Liquidity Constraint and the Demand for Food: Income Elasticity of Calorie in Rural Ethiopia. By Tekabe Ayalew
  9. Community Targeting for Poverty Reduction in Burkina Faso. By David Bigman; Stefan Dercon; Dominique Guillaume; Michel Lambotte
  10. Imperfect Markets: a Case Study in Senegal By Marijke Verpoorten
  11. Liquidity Constraint and the Demand for Food: Income Elasticity of Calorie in Rural Ethiopia. By Jozef Konings; Filip Roodhooft
  12. A Quantitative Analysis of Genocide in Kibuye Prefecture, Rwanda By Philip Verwimp

  1. By: Romain Houssa
    Abstract: We analyse the costs of a monetary union in West Africa by means of asymmetric aggregate demand and aggregate supply shocks. Previous studies have estimated the shocks with the VAR model. We discuss the limitations of this approach and apply a new technique based on the dynamic factor model. The results suggest the presence of economic costs for a monetary union in West Africa because aggregate supply shocks are poorly correlated or asymmetric across these countries. Aggregate demand shocks are more correlated between West African countries.
    Date: 2008–03
  2. By: Brückner, Markus; Ciccone, Antonio
    Abstract: According to the economic approach to political transitions, negative transitory economic shocks can give rise to a window of opportunity for democratic change. We examine this hypothesis using yearly rainfall variation over the 1980-2004 period in 41 Sub-Saharan African countries. We find that a 25% drop in rainfall increases the probability of a transition to democracy during the following two years by around 3 percentage points. A 5% fall in income due to low rainfall raises the probability of democratization by around 7 percentage points. We also find that rainfall does not affect transitions from democracy to autocracy.
    Keywords: democratization; transitory economic shocks
    JEL: O0 P0
    Date: 2008–02
  3. By: Dominique Guillaume; David Stasavage
    Abstract: This paper analyses the experience with monetary policy in African countries which have participated in rule-based international monetary arrangements (CFA Franc Zone, Eastern African Currency Board and Rand Monetary Area). It argues that African countries have generally lack the political institutions necessary for governments to credibly commit through domestic institutions (exchange rate pegs or independent central banks). For such countries, monetary unions can provide an alternative source of credible commitment to sound macroeconomic policies, but only when exit from a union is made costly by the existence of parallel regional accords, and only when governance structures of monetary unions have been designed so as to maximise chances for the enforcement of monetary rules.
    Date: 2008–03
  4. By: Liu, G.; Gupta, R.; Schaling, E. (Tilburg University, Center for Economic Research)
    Abstract: Journal of Economic Literature Classification: E17, E27, E32, E37, E47
    Keywords: DSGE Model;VAR and BVAR Model;Forecast Accuracy;DSGE Forecasts;VAR Forecasts;BVAR Forecasts
    Date: 2008
  5. By: Filip Verwimp
    Abstract: I use an extended version of Mincer's original model to estimate the returns to schooling in rural Ethiopia. In a first step, a multinomial logit model is applied to distinguish between four groups of people, (1) full-time farmers, (2) part-time farmers, part time wage workers, (3) part-time farmers, part time traders and (4) full-time non-farmers. In a second step, a correction for sample selectivity is made using the Lee-Heckman method and the returns are estimated. The results show that returns on schooling are high in group (4) and lower in groups (2) and (3). Entry in well-paid jobs is constrained for non educated people. Women are particularly well represented in the third group but strongly underrepresented in the fourth group. The estimation shows that education is a worthwile investment in rural Ethiopia and the fact that households underinvest in education can be attributed to the lack of resources at the household level.
    Date: 2008–03
  6. By: Philip Verwimp
    Abstract: The paper analyses the agricultural policy of the Habyarimana regime, which ruled Rwanda from 1973 to 1994. Econometric analysis of rural household survey data is used to investigate the effects of the 1989 crop failure in southern Rwanda on children’s health status. The paper shows that children in southern Rwanda are chronically malnourished, more then in other prefectures of Rwanda. It is shown that the 1989 crop failure developed into famine and the causes of this development are investigated. It turns out that the Habyarimana regime did not respond to early warnings of famine conditions and pretend it did not know what was going on. The relationship between this non-response to famine, agricultural policy in general and the 1994 genocide is demonstrated.
    Keywords: agriculture, famine, survey research, Rwanda
    JEL: I12 Q18
    Date: 2008–03
  7. By: Daniel Ayalew
    Abstract: We apply the set-up of limited commitment model to empirically test the role of informal risk-sharing networks using panel data on informal credit transactions from rural Ethiopia. The empirical estimates provide convincing evidence for the belief that enforcement problem limits the direct role of credit transactions in risk-sharing arrangements between rural households, whether the villages are ethnically homogeneous or not. We also find that households with more land have better access to the informal credit market and access is significantly improved through their participation in small group networks. But the informal credit market and the networks under consideration serve little purpose to the land poor households. These results, therefore, imply that full risk-sharing does not appear to materialize at the village level.
    Keywords: Risk-sharing; Limited commitment; Informal credit; Consumption smoothing
    JEL: D91 O12 Q12
    Date: 2008–03
  8. By: Tekabe Ayalew
    Abstract: In this study we attempt to add to the empirical literature by estimating the income elasticity of calorie intake for rural Ethiopia. We have extend the existing literature in two directions. First, using data collected from rural Ethiopia during 1994-95, efforts were made to separate the effects of permanent and transitory income on calorie consumption. Second, on the grounds that income elasticity of calorie consumption differs between those who can smooth their consumption and those who can not do so due to inability to borrow against future income, we considered these two groups explicitly. The results revealed that the calorie elasticity with respect to income (permanent, transitory and total) is consistently higher for credit constrained households. Specifically the elasticity with respect to permanent income ranges from 90 percent for constrained to 42 percent for constrained households, depending on the source of income and estimation procedure. Not surprisingly, the elasticity with respect to both permanent and transitory incomes is not different from zero for non constrained households. For the constrained households, calorie consumption responds to even transitory income, though the figure is less than the corresponding figure for permanent income. Apparently, differentiating households in terms of their ability to smooth consumption, and decomposing observed income into permanent and otherwise partly explains why the evidence on the estimates of the income elasticity of calorie intake are so diverse.
    Date: 2008–03
  9. By: David Bigman; Stefan Dercon; Dominique Guillaume; Michel Lambotte
    Abstract: The paper develops a method for targeting anti-poverty programs and public projects on poor communities in rural and urban areas. The method is based on the application of an extensive data-set from a large number of sources and the integration of the entire data-set in a Geographical Information System. This data-set includes data from the population census, household-level data from a variety of surveys, community-level data on the local road infrastructure, public facilities, water points, etc., and department-level data on the agro-climatic conditions. An econometric model that estimates the impact of household-, community-, and department-level variables on households’ consumption has been used to identify the key explanatory variables that determine the standard of living in rural and urban areas. This model was applied to predict poverty indicators for 3871 rural and urban communities across the country and to provide a mapping of the spatial distribution of poverty in Burkina Faso. Simulation analysis was subsequently conducted to assess the effectiveness of village-level targeting based on these predictions of the poverty indicators. The results show that village-level targeting based on these predictions provides an improvement over regional targeting by reducing the leakage of the targeted program and the percentage of the population that remains undercovered
    Date: 2008–03
  10. By: Marijke Verpoorten
    Abstract: Farmers in developing countries are confronted with imperfect markets. This has an impact on their production activities. When implementing developing projects these market imperfections should be taken into account. This paper is an attempt to discuss the impact of imperfect markets in the context of an irrigation project in village Pata, Senegal. The first section models the production decision of the agricultural household. The second section presents the irrigation project in Pata. The third section tests for the presence of imperfections in the credit and labour markets of Pata. I conclude by discussing the implications for the project.
    Date: 2008–03
  11. By: Jozef Konings; Filip Roodhooft
    Abstract: E-business offers buyers and sellers a new form of communication and provides an opportunity to create new marketplaces. Theoretical studies suggest in general that the development of e-business results in higher firm performance as a result of lower search and head-to-head comparison costs. However, there are a number of recent theoretical studies, which demonstrate that the growth of e-commerce may lead to monopolistic pricing behaviour so that firms engaging in e-commerce need not perform better compared to more traditional enterprises. To date, there exists little empirical evidence on the impact of information technology on economic performance. This paper is the first that uses a large representative data set of Belgian firms to study empirically the impact of e-business on corporate performance. Our main conclusions can be summarised as follows: (1) The penetration of the Internet in Belgian firms is high, however, the use of e-business is still limited. (2) It is especially the large firms that engage in e-business and mostly in e-procurement. (3) E-business has no effect on total factor productivity in small firms, however, we find positive effects on performance of e-business in large firms.
    Keywords: new economy, internet, firm performance, e-procurement, e-business
    JEL: D0 L0 O3 M0
    Date: 2008–03
  12. By: Philip Verwimp
    Abstract: This paper is a quantitative study of the genocide in the prefecture of Kibuye in Rwanda in 1994. We use an original data base developed by the organisation of the survivors of the genocide (IBUKA) who collected the data by house-to-house fieldwork. The data contain information on the age, sex, commune of residence before the genocide, the professional occupation of the victims, the place and date of death and the weapon used to kill, for a total of 59.050 victims of genocide. For one commune (Mabanza), we re-coded the data, present detailed statistics and perform an analysis of survival chances. From the analysis, we derive that Tutsi from the sectors of Mabanza commune whose Tutsi population did not (or only in limited numbers) go to the Gatwaro Stadium had a better chance to survive the genocide in Kibuye. For the whole of the prefecture, we present an estimation of the daily killing rate, estimations of the number of Tutsi killed in the major massacres and the weapons used. For over 25.000 victims for which the data file has complete information, we present a logistical regression explaining the use of either a traditional weapon or a fire-arm. The analysis shows that the probability to be killed with a fire-arm depended on the commune of residence of the victim, the age of the victim, the number of days after April 6 the victim was killed and on interaction effects between the latter two variables and the sex of the victim.
    Date: 2008–03

This nep-afr issue is ©2008 by Suzanne McCoskey. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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