BUSINESS CYCLE, MACROECONOMIC INDICATORS AND ECONOMIC GROWTH. THE SIERRA LEONE EXPERIENCE
Abstract
The study investigates the impact of business cycle fluctuation on economic growth in Sierra Leone using the autoregressive distributed lag (ARDL) model bound testing framework with annual time series data for the period 1992 to 2022. The result from the unit root shows that the variables are mixed variables of I (0) and I (1) variable series, while the bound test testifies that there is an existence of cointegration in the long run. The long-run result reveals that domestic credit to the private sector, inflation, lending interest rate, and broad money supply are the main determinants of the business cycle fluctuation on the economic growth in Sierra Leone. The result shows that broad money supply portrays a positive effect on the business cycle economic growth and statistically it is not significant at the 0.05 level of significance. It implies that for every 1% increase in the broad money supply, the business environment will be improved by 0.220 in the long run. This result implies that an increase in money supply is part of an expansionary monetary policy that tends to boost the industrial sector by expanding the investment which tends to create employment and improve the business cycle and economic growth in Sierra Leone. Policymakers are therefore encouraged to further enhance the power of appropriate monetary authorities in introducing both monetary and credit policies that will serve to increase the broad money supply.
JEL: E61, E62, P35
Article visualizations:
Keywords
Full Text:
PDFReferences
Agasha, N. (2006). Determinants of export growth rate in Uganda. School of Statistics and Planning Makerere University. 1987-2006, 1-24.
Antonakakis, N., & Tondl, G. (2014). Does integration and economic policy coordination promote business cycle synchronization in the EU?. Empirica, 41, 541-575.
Baum, C., Caglayan, M., & Ozkan, N. (2013). The role of uncertainty in the transmission of monetary policy effects on bank lending. The Manchester School, 81(2), 202-225.
Cho, J. and Cooley, T. (1990) The business cycle with nominal contracts, Mimeo. (Bradley Policy Research Center, University of Rochester. Rochester, NY).
Christiano, L. and Eichenbaum, M. (1990). Current real business cycle theories and aggregate labor market fluctuations. Mimeo. (Federal Reserve Bank of Minneapolis, Minneapolis MN, and Northwestern University, Evanston IL).
Danthine, J. P., & Donaldson, J. B. (1993). Methodological and empirical issues in real business cycle theory. European Economic Review, 37(1), 1-35.
Dillon Jr, T. J. (1994). The World Trade Organization: a new legal order for world trade. Mich. J. Int'l L., 16, 349.
Duramany-Lakkoh, E. K. (2020). The Effect of Fiscal Policy on Financial Sector Development in Sierra Leone: A Time Series Approach. International Journal of Development and Economic Sustainability, 8(4), 1-23.
Duramany-Lakkoh, E. K. (2021). Surveying the Socioeconomic and Business Dimensions of Microfinance Institutions in Rural Sierra Leone before the Ebola Outbreak: A Descriptive Statistical Approach. Journal of Financial Risk Management, 10 (2), 172-186.
Duramany-Lakkoh, E. K., and Udeh, E. (2018). A Stakeholder Perspective on the Effect of e-Banking on Customer Satisfaction in Commercial Banks Using Funnel Ranting Method. International Journal of Business Management Review, 4(9), 75-91
Eichenbaum, M. (1991). Real business cycle theory: Wisdom or whimsey, Journal of Economic Dynamics and Control 15, 607-626.
Ferdous, F. B. (2011). Pattern and Determinants of Export Diversification in East Asian Economies, International Conference on Social Science and Humanity IPEDR Vol. 5, IACSIT Press, Singapore.
Gbenro, O. B., Duramany-Lakkoh, E. K., & Kamara, S. (2023). An Assessment of the Stakeholders' Perception of Reinsurance and Insurance Products and Services on the Performance of Insurance Companies. International Journal of Development and Economic Sustainability, 11(2), 1-37.
Greenwood, J. and Huffman, G. (1991). Tax analysis in a real business cycle model: On measuring Harberger triangles and Okun gaps, Journal of Monetary Economics 27, 1677190.
Hall, R. (1988). A non-competitive model of fluctuations, Working paper no. 2576 (NBER, Cambridge, MA).
Imrohoroglu, A. (1989). Cost of business cycles with indivisibilities and liquidity constraints, Journal of Political Economy 97, 1364-l 383.
Kydland. E. F., and Prescott E. C. (1982). The econometrics of the general equilibrium approach to business cycle. The Scandinavian Journal of Economics 93. 161-178.
Lucas, R. E. (1987). Models of business cycles basil. Blackwell. New York.
Menji, S. (2010). Export performance and determinants in Ethiopia. retrieved from https://mpra.ub.uni-muenchen.de/29427/1/MPRA_paper_29427.pdf
Mullineux, A. W., & Murinde, V. (2001). Developing financial structures to foster enterprise development. Institute for Development Policy and Management, University of Manchester.
Pesaran, M. H., Shin, Y., & Smith, R. P. (1997). Pooled estimation of long-run relationships in dynamic heterogeneous panels. Retrieved from https://www.econ.cam.ac.uk/people-files/emeritus/mhp1/jasaold.pdf
Rotemberg. J. and Woodford, M. (1989). Oligopolistic pricing and the effect of aggregate demand on economic activity. Working paper 3206 (NBER. Cambridge, MA).
Santos-Paulino, A. U. (2000). Trade liberalisation and export performance in selected developing countries (No. 00, 12). Department of Economics Discussion Paper.
Sharma, K. (2003). Factors determining India’s export performance. Journal of Asian Economics, 14(3), 435-446.
Van Dijk, D., Osborn, D., & Sensier, M. (2002). Changes in the variability of the business cycle in the G7 countries (No. EI 2002-28).
Zhang, X. F. (2006). Information uncertainty and analyst forecast behavior. Contemporary Accounting Research, 23(2), 565-590.
DOI: http://dx.doi.org/10.46827/ejefr.v8i1.1623
Refbacks
- There are currently no refbacks.
Copyright (c) 2024 Ezekiel K. Duramany-Lakkoh, Michael Fallah Bockarie, Abdul-Majid Abu, Ernest Udeh
This work is licensed under a Creative Commons Attribution 4.0 International License.
The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.
Copyright © 2016 - 2023. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing Group. All rights reserved.
This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.
