Economic Growth and Political Institutions in the WAEMU: What Do We Know?
In: European Journal of Business and Management. Vol.9, No.2, 2017
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In: European Journal of Business and Management. Vol.9, No.2, 2017
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In: Journal of Economics and Political Economy, Band 3 N° 4
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In: Journal of Economics and Sustainable Development, ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online) Vol.7, No.22, 2016
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AbstractThis article investigates the main determinants of private investment in the West African Economic and Monetary Union (WAEMU). After checking for unit root and co-integration, Error Correction Model is specified, and three estimators are performed: Dynamic Fixed-Effects, Mean Group, and Pooled Mean Group. Hausman tests show that the Dynamic Fixed-Effects Estimator is more efficient and consistent than others. Results suggest that, in the short-run, private investment in the WAEMU zone is determined by the aggregate demand conditions: gross domestic product and output gap, while, in the long-run, it is determined by gross domestic product, and political stability. The short-run elasticity of gross domestic product and output gap are statistically significant and average to 5.7 and 0.06, respectively. The long-run elasticity of gross domestic product and the semi-elasticity of political stability are statistically significant and average to 2.4 and -0.25, respectively. These finds imply that, to promote private investment in the WAEMU zone, there is a need among others for more proper design and implementation of aggregate demand management policies, and political framework stability. Key words: Private investment, WAEMU, Dynamic fixed-effects estimator.JEL: C33, E21, F15.
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In: International Journal of Economics and Finance, ISSN 1916-971X (Print) ISSN 1916-9728 (Online), Vol 9, No 2 (2017)
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World Affairs Online