nep-afr New Economics Papers
on Africa
Issue of 2010‒05‒29
seven papers chosen by
Quentin Wodon
World Bank

  1. Can a Social Safety Net Affect Farmers’ Crop Portfolios? A Study of the Productive Safety Net Programme in Ethiopia By Andersson, Camilla
  2. Short-Versus Long-Term Credit and Economic Performance: Evidence from the WAEMU By Kangni Kpodar; Kodzo Gbenyo
  3. Oil Windfalls in Ghana: A DSGE Approach By Jan Gottschalk; Jihad Dagher; Rafael Portillo
  4. Changing the Risk at the Margin Smallholder Farming and Public Policy in Developing Countries By Mannberg, Camilla
  5. A Phoenix in Flame ? Portfolio Choice and Violence in Civil War in Rural Burundi By Eleonora Nillesen; Philip Verwimp
  6. Modelling Stock Returns Volatility In Nigeria Using GARCH Models By Emenike, Kalu O.
  7. Orphanhood and human capital destruction: Is there persistence into adulthood?. By Beegle, Kathleen; Weerdt, Joachim De; Dercon, Stefan

  1. By: Andersson, Camilla (Department of Economics, Umeå University)
    Abstract: In this paper, we examine whether a minimum level of ensured consumption from a social safety net has the potential of breaking the vicious circle of risk avoidance and low return in African agriculture. We study how the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers’ crop portfolios. The effects of programme participation on the value and risk of the crop portfolio are examined in a Just-Pope production function, and the effects of programme participation on composition of the crop portfolio are tested in a set of acreage response models. The empirical analysis is based on unique household panel data that allow us to control for unobserved heterogeneity. No significant effect on the value and risk of the crop portfolio could be found. However, the programme seems to have brought about some changes in the land allocated to different crops. The greatest effect is towards increased cultivation of perennials, which are high-value, high-risk crops in this part of Ethiopia.
    Keywords: Crop choice; Social safety nets; Food-for-work programmes; PSNP; Ethiopia
    JEL: O22 Q12 Q18
    Date: 2010–05–19
  2. By: Kangni Kpodar; Kodzo Gbenyo
    Abstract: This paper studies the link between financial development and economic growth in the West African Economic and Monetary Union (WAEMU). Using panel data for WAEMU countries over the period 1995-2006, the results suggest that while financial development does support growth in the region, long-term bank financing has a greater impact on economic growth than short-term financing because long-term projects have higher returns adjusted for risks. Given that in the WAEMU short-term credit accounts for about 70 percent of credit to the private sector, WAEMU countries are less able to reap the full benefits of improvements in their financial systems. The results also highlight the importance of macroeconomic stability, a creditor-friendly environment, political stability, and the availability of long-term financial resources in fostering banks’ supply of long-term loans.
    Keywords: Bank credit , Banking sector , Credit risk , Cross country analysis , Economic growth , Economic models , Excess liquidity , Financial incentives , Human capital , Loans , Political economy , Time series , West African Economic and Monetary Union ,
    Date: 2010–05–06
  3. By: Jan Gottschalk; Jihad Dagher; Rafael Portillo
    Abstract: We use a calibrated multi-sector DSGE model to analyze the likely impact of oil windfalls on the Ghanaian economy, under alternative fiscal and monetary policy responses. We distinguish between the short-run impact, associated with demand-related pressures, and the medium run impact on competitiveness and growth. The impact on inflation and the real exchange rate could be moderate, especially if the fiscal authorities smooth oil-related spending or increase public spending’s import content. However, a policy mix that results in both a fiscal expansion and the simultaneous accumulation of the foreign currency proceeds from oil as international reserves—to offset the real appreciation—would raise demand pressures and crowd-out the private sector. In the medium term, the negative impact on competitiveness—resulting from â€Dutch Disease†effects—could be small, provided public spending increases the stock of productive public capital. These findings highlight the role of different policy responses, and their interaction, for the macroeconomic impact of oil proceeds.
    Keywords: Demand , Economic models , Exchange rate appreciation , Fiscal policy , Ghana , Government expenditures , Inflation , Monetary policy , Nonoil sector , Oil production , Oil revenues , Reserves accumulation ,
    Date: 2010–05–06
  4. By: Mannberg, Camilla (Department of Economics, Umeå University)
    Abstract: This thesis consists of a summary and four self-contained papers. Paper [I] examines whether the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers’ crop portfolios. The empirical analysis suggests that the value and risk of the crop portfolio have not been altered due to the programme. However, the programme seems to have brought about some changes in the land allocated to different crops. Paper [II] studies how a social safety net affects farmers’ (dis)investments in productive assets. More specifically, it studies how the Productive Safety Net Programme in Ethiopia has changed livestock and tree holdings. The results indicate no significant effect on livestock holdings, but a significant increase in tree holdings. Paper [III] investigates if there is a problem of adverse selection in formal microlending in rural Bangladesh. The results indicate that farmers who only borrow formally have a shadow price of capital that is substantially higher than the average informal interest rate. This suggests that farmers that only borrow formally are perceived as poor credit risks by informal lenders. Paper [IV] explores the economic incentives surrounding the cultivation of opium poppy in Afghanistan. Specifically, it examines the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The results indicate that both these features are likely to affect the outcome of eradication policies.
    Keywords: Smallholder farming; Public policy; Informal risk strategies; Microcredit; Opium eradication; Development economics; Food policy
    JEL: O22 Q12 Q18 Q18 Q28
    Date: 2010–05–19
  5. By: Eleonora Nillesen; Philip Verwimp
    Abstract: This paper challenges the idea that farmers revert to subsistence farming when confronted with violence from civil war. While there is an emerging macroeconomic consensus that wars are detrimental to development, we find contrasting microeconomic evidence. Using several rounds of (panel) data at the farm and community level, we find that farmers in Burundi who are confronted with civil war violence in their home communities increase export and cash crop growing activities, invest more in public goods and reveal higher levels subjective welfare evaluations. We interpret this in the light of similar recent micro-level evidence that points to post-traumatic growth effects after (civil) warfare. Our results are confirmed across specifications as well as in robustness analyses.
    Keywords: Civil war, investment, post-traumatic growth.
    Date: 2010
  6. By: Emenike, Kalu O.
    Abstract: There is quite an extensive literature documenting the behaviour of stock returns volatility in both developed and emerging stock markets, but such studies are scanty for the Nigerian Stock Exchange (NSE). Modelling volatility is an important element in pricing equity, risk management and portfolio management. For these reasons, this paper investigates the behaviour of stock return volatility of the Nigerian Stock Exchange returns using GARCH (1,1) and the GJR-GARCH(1,1) models assuming the Generalized Error Distribution (GED). Monthly All Share Indices of the NSE from January 1999, to December 2008, provided the empirical sample for investigating volatility persistence and asymmetric properties of the series. The results of GARCH (1,1) model indicate evidence of volatility clustering in the NSE return series. Also, the results of the GJR-GARCH (1,1) model show the existence of leverage effects in the series. Finally, the Generalized Error Distribution (GED) shape test reveals leptokurtic returns distribution. Overall results from this study provide evidence to show volatility persistence, fat-tail distribution, and leverage effects for the Nigeria stock returns data.
    Keywords: Modeling; Volatility; Stock Returns; GARCH Models; Nigerian Stock Exchange
    JEL: C52 C22 G10
    Date: 2010–01–15
  7. By: Beegle, Kathleen; Weerdt, Joachim De; Dercon, Stefan
    Abstract: This article presents unique evidence that orphanhood matters in the long run for health and education outcomes in a region of northwestern Tanzania. We study a sample of 718 non-orphaned children surveyed in 1991–1994 who were traced and reinterviewed as adults in 2004. A large proportion, 19%, lost one or more parents before age 15 in this period, allowing us to assess permanent health and education impacts of orphanhood. In the analysis, we control for a wide range of child and adult characteristics before orphanhood, as well as community fixed effects. We find that maternal orphanhood has a permanent adverse impact of 2 cm of final height attainment and one year of educational attainment. Expressing welfare in terms of consumption expenditure, the result is a gap of 8.5% compared with similar children whose mothers survived until at least their 15th birthday.
    JEL: I20 I10 I31 O15
    Date: 2010–02

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