What is it about?
The study investigates the effect of financial development and trade liberalisation on macroeconomic volatility in Africa between 1980 and 2017. Results show that increased financial openness also leads to increased income volatility for the de jure measure of financial openness while for the de facto measure increased financial openness reduces income volatility. Results also show that financial openness leads to subtle volatility of output growth in Africa. The study concludes that policymakers should focus more on policies that will foster financial system development as it has shown to be very effective in reducing macroeconomic volatility in Africa.
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Why is it important?
This study deployed the de facto and de jure measure for financial development.
Perspectives
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This page is a summary of: Do Trade Liberalisation and Financial Development Affect Macroeconomic Volatility? Evidence from Africa, The Indian Economic Journal, August 2020, SAGE Publications,
DOI: 10.1177/0019466220943832.
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