Unveiling the causal impact of US economic policy uncertainty on exchange market pressure of African economies

OLASEHINDE WILLIAMS G. O., OLANIPEKUN I. O.

Journal of Public Affairs, cilt.22, sa.1, 2022 (ESCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 22 Sayı: 1
  • Basım Tarihi: 2022
  • Doi Numarası: 10.1002/pa.2278
  • Dergi Adı: Journal of Public Affairs
  • Derginin Tarandığı İndeksler: Emerging Sources Citation Index (ESCI), Scopus, Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, Communication & Mass Media Index, Communication Abstracts, PAIS International, Political Science Complete, Public Affairs Index, vLex
  • İstanbul Gelişim Üniversitesi Adresli: Evet

Özet

One of the factors responsible for the growth of African economies is their interaction with advanced economies such as the United States. In this regard, this study investigated the causal linkages between the exchange market pressure (EMP) of African economies and the economic policy uncertainty (EPU) of the United States. A panel of nine African countries were studied from 1996 M01 to 2018 M12 using a bootstrap Granger causality test because of its robustness to cross-sectional dependence and heterogeneity. We found that US EPU Granger causes EMP in the panel of African countries. At country level, we found causal relations running from US EPU to EMP in Egypt, Ethiopia, Ghana, Kenya, Libya and South Africa. In Angola, Morocco and Nigeria, EMP was independent of uncertainty in the United States. This suggests that African countries need to be watchful of their reliance on the US economy as negative effects of policy uncertainty emanating from the US might be transmitted to their economy through its influence in the exchange market.