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This study examines the relationship between tourism development, governance, and income inequality in 31 sub-Saharan African (SSA) countries. In the main, the study aims at examining whether tourism inflows ameliorate or exacerbate income inequality in the studied countries. The study also aims to examine whether institutional governance modulates the impact of tourism development on income inequality. For robustness, four proxies of governance indicators have been used, namely, the rule of law, voice and accountability, political stability, and government effectiveness, thereby leading to four separate specifications with four interaction variables. The Generalized Method of Moments (GMM), which accounts for endogeneity, has been used to examine this linkage. Contrary to some of the previous studies, the results of our study show that an increase in tourist arrivals leads to a decrease in income inequality in the studied SSA countries. The results also show that the favorable negative impact of tourism on income inequality could switch to an unfavorable positive impact if the following levels of governance are exceeded: 1.6842, 3.1429, and 0.7436 for voice and accountability, political stability, and government effectiveness, respectively. Policy implications are discussed.

This paper examines the causal relationship between CO2 emissions and economic growth in 10 sub-Saharan African (SSA) countries. This study attempts to answer one critical question: does economic growth Granger-cause CO2 emissions in SSA countries? Unlike some of the previous studies, this paper uses a dynamic panel data analysis procedure to examine this linkage. The results of the error-correction model (ECM)-based panel causality show that there is a unidirectional causal flow from economic growth to CO2 emissions in the 10 studied countries. This applies irrespective of whether the causality is tested in the short run or in the long run. These findings have important implications. They demonstrate that CO2 emissions mitigation policies are unlikely to have any adverse effects on these countries' long-term growth paths. This implies that these countries can pursue CO2 emission reduction policies without necessarily compromising their quest for a long-term positive growth trajectory.

In this paper we examine the causal relationship between electricity consumption, exports and economic growth in the DRC, using the newly developed ARDL-bounds testing approach. In order to account for the omission-of-variable bias, the study incorporates exports as an intermittent variable between electricity consumption and economic growth – thereby creating a simple multivariate model. The empirical results of this study show that, while both electricity consumption and economic growth Granger-cause each other in the short run; in the long run, it is economic growth that Granger-causes electricity consumption in the DRC. This finding has important policy implications, as it indicates that the DRC's long-term economic growth is not fully dependent on the electricity consumption. This implies that in the long run, the country could successfully pursue electricity conservation measures – without necessarily stifling its economic growth.

In this article we examine the dynamic causal relationship between economic growth, employment, and poverty reduction in South Africa -- using the Auto-Regressive Distributed Lag (ARDL) bounds testing procedure. The study attempts to answer one critical question: does economic growth in South Africa trickle down to the poor through job creation? The study uses two proxies to measure the incidence of poverty in South Africa, namely household consumption per capita and infant mortality. The empirical results of the study fail to support the trickle-down effect between economic growth and poverty reduction in South Africa. Moreover, the results show that there is no causal relationship between economic growth and poverty reduction in either direction. The results apply irrespective of whether the poverty level is measured by the real per-capita consumption or by the infant mortality rate.

PurposeThe paper seeks to examine the inter‐temporal causal relationship between financial development and poverty reduction in Kenya during the period 1968‐2006. The study attempts to answer one critical question: is financial development in Kenya a spur to poverty reduction?Design/methodology/approachThe study uses a trivariate causality model based on cointegration and error‐correction mechanism. Unlike the majority of the previous studies, the current study incorporates the savings rate as an intermittent variable in the bivariate causality setting between financial development and poverty reduction – thereby creating a simple trivariate causality model.FindingsThe study finds a distinct causal flow from financial development to poverty reduction in Kenya. In addition, the study finds a uni‐directional causality from financial development to savings and a bi‐directional causality between savings and poverty reduction. The results apply irrespective of whether the causality test is conducted in the short run or in the long run.Practical implicationsThe empirical results of this study will help policy makers to determine whether the financial development in Kenya is pro‐poor and pro‐savings.Originality/valueAlthough several attempts have been made to investigate the relationship between financial development, savings, economic growth and other macroeconomic variables, very few studies have examined the impact of financial development on the ultimate policy goal, i.e. poverty reduction. Moreover, the majority of the previous studies are based mainly on Asia and Latin America – affording sub‐Saharan African countries very little or no coverage at all.

This paper examines the impact of interest rate reforms on financial deepening and economic growth in Kenya, using two models: the financial deepening model and the dynamic Granger causality model. The study attempts to answer two critical questions: Does interest rate liberalization in Kenya have any positive influence on financial deepening? Does the financial depth which results from interest rate liberalization lead to economic growth? Using cointegration and error-correction models, the study finds strong support for the positive impact of interest rate liberalization on financial deepening in Kenya - although the strength and clarity of its efficacy is sensitive to the level of the dependency ratio. The study also finds financial depth to Granger cause economic growth in Kenya. The study, therefore, concludes that the interest rate liberalization in Kenya has succeeded in increasing economic growth through its influence on financial depth. This applies irrespective of whether the models are estimated in a static long-run formulation (cointegration model) or in the dynamic formulation (error-correction model).