Inclusive and Macroeconomic Development and its Vulnerabilities
Paper Session
Saturday, Jan. 3, 2026 10:15 AM - 12:15 PM (EST)
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Chairs:
Mina Baliamoune-Lutz, University of North Florida - Juliet Elu, Morehouse College
Government Size and Risk Premium: Evidence from South Africa
Abstract
Given the rise in the government debt level in recent times, this paper aims to examine the effect of an increase in government size on risk premium and its transmission in the economy. We jointly identify the term spread shock (originating at the short end and the long end) and the government size shock, using max share identification. Term spread shock originating at the long end is driven by higher risk premium, unlike the shock originating at the short end, and increases inflation and reduces growth. The results suggest that the increase in the share of government expenditure in GDP (size) increases long-term rates by increasing the risk (term premium) and hence obstructs the transmission of monetary policy. As expected, the effect of government size on risk premium is more pronounced during recessions compared to expansions. By including a news shock about future economic activity, we rule out that the effect of government size shock on term premium is not driven by a news shock. We estimate the parameters of a New Keynesian model with term premium by matching the responses in data with responses from the model. The model can generate a similar rise in risk premium due to the increase in government size, and the estimated parameters suggest that the coefficient of risk aversion during recession is more than twice that of during expansions.Mobile Money and Women's Economic Empowerment in Africa: A Gender-Based Analysis
Abstract
Purpose – This study examines mobile money's potential as a financial technology tool to advance Sustainable Development Goal (SDG) targets, with particular focus on women economic empowerment (WEE) in Africa.Study design – The study employs the System Generalized Method of Moments (GMM) estimator to analyze panel data from 43 African countries spanning the 2011 – 2022 period.
Findings – The analysis reveals that while mobile money adoption demonstrates positive associations with specific WEE indicators, notably share of women borrowing to start or operate a business and share of women participating in decision-making, it shows negative correlations with women self-employment and female assets ownership. Gender analysis further indicates heterogeneous effects, suggesting that mobile money's empowerment effects on WEE are context-dependent rather than universally positive.
Originality – This research advances existing studies by conducting the first comprehensive macroeconomic analysis of mobile money's effects on multiple dimensions of women economic empowerment in African nations, complementing existing micro-level studies. The study's distinctive contribution stems from its novel macroeconomic examination of mobile money's gendered impacts, addressing gaps in literature.
Implications – The findings carry important policy implications, highlighting the need for gender-sensitive policies to leverage mobile money effects on women empowerment; complementary legal reforms to address structural barriers; and targeted financial literacy programs to maximize mobile money’s alignment to SDG related to gender equality. However, given the regional specificity of the sample and the complexity of empowerment metrics, these results should be interpreted as indicative rather than definitive, warranting further validation across diverse socioeconomic contexts.
Effects of Exchange Rate Movements on Inflation in WAMU Countries
Abstract
Exchange rate volatility remains a persistent challenge in the West African Monetary Union (WAMU), posing significant risks to price stability and effective macroeconomic management. Although WAMU countries maintain a nominal peg to the Euro, inflation trends have continued to fluctuate, raising doubts about the fixed exchange rate regime’s ability to shield domestic economies from external shocks. Using annual data from 2005 to 2024, the study explores the relationship between exchange rate dynamics and inflation in WAMU. The paper employs econometric techniques to analyze the impact of exchange rate regimes on inflation outcomes. Specifically, it aims to: (1) assess the relationship between exchange rate regimes and inflation in WAMU; (2) investigate the effect of exchange rate fluctuations on inflation, while accounting for other macroeconomic variables; and (3) examine inflation rate variations across different exchange rate arrangements. The empirical findings suggest that pegged exchange rate regimes are generally associated with lower inflation. Additionally, exchange rate fluctuations exert a significant influence on inflation, although the strength and nature of this relationship vary across WAMU countries. These results offer important insights for policymakers, emphasizing the need for prudent exchange rate management tailored to individual country conditions. The study recommends maintaining a pegged exchange rate as a strategic tool for inflation control, while also highlighting the importance of considering country-specific economic structures when designing effective monetary policies.Structural Investigation of the African International Trade: A Network Analysis
Abstract
Existing literature shows international economy’s increasing role in nations wealth and pathway towards development. Unlike the gravity model widely used to analyze the world trade, this study investigates the African international trade through network analysis approach, based on bilateral trade data. It is thus an empirical investigation of the structural relations linking countries in the African international trade network (AITN), and their implications on its evolution, integration and growth potential. Considering some key network parameters both topological and centrality measures we investigated the structural features and evolution dynamics of the AITN. Thus, the AITN was found relatively stable (in number of countries involved), highly symmetrical, displaying an increasing economic integration over time, but with still weak cohesion between countries, and a rising complexity and density reflecting an intensification of trade linkages between countries. The AITN was also found dominated by South Africa – first ranked country across all centrality measures, over years – with an asymmetric integration between African and non-African countries, the later constituting the bulk of the African international trade in volume and value.Geopolitical Uncertainty, Foreign Direct Investment, and Economic Volatility in African Frontier Markets
Abstract
The need for a unified performance of the economies of many African nations remains integral to the expected growth and development of the African frontier markets. This study explores the dynamic interplay between geopolitical uncertainty, foreign direct investment (FDI), and economic volatility in African frontier markets. The specific objectives include to assess the impact of geopolitical uncertainty on FDI inflows in African frontier markets; to analyse the relationship between FDI and macroeconomic volatility (GDP growth instability and inflation fluctuations); and to evaluate the role of economic freedom in moderating these effects. Annual panel data from five (5) African frontier economies including Nigeria, Ghana, Kenya, Rwanda and Cote d’ivore over the period 1995–2024 was used. The applied statistical tools include descriptive statistics, and inferential statistics of unit root test, cointegration test, correlation test, normality test, vector autogression estimates and granger causality test (GCT). The findings revealed that an R-squared value of 0.723543, representing the coefficient of determination, indicates that the independent variables collectively account for 72 percent of the FDI inflow equation, suggesting that the FDI model is well-suited and the explanatory variables are well chosen. This study concluded that all variables including economic freedom, economic volatility, geopolitical uncertainty and inflation significantly impact the FDI inflow in all the selected nations indicating further that FDI mitigate economic volatility when stable and diverse but increase fragility if concentrated in extractive industries or vulnerable to external shocks. This study recommended the need for the enhancement of political and institutional stability where governments should emphasize peacebuilding, the rule of law, and political inclusivity. Electoral integrity, constitutional stability, and less military meddling are crucial for mitigating perceived dangers and enticing long-term foreign investment.Discussant(s)
Gbidum Sunday Tote
,
Central Bank of Nigeria
Ejime Aniemeke
,
Nile University of Nigeria
Debora Umba
,
Centre for European Research in Microfinance (CERMi) and University of Mons
Abhishek Kumar
,
University of Southampton
Stephen Armah
,
Ashesi University
Orieta Covi
,
African Development Bank Group
JEL Classifications
- O1 - Economic Development