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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Capital mobility in sub-Saharan Africa: a panel data approach
Authors:De Wet, Albert H.
Van Eyden, RenéeISNI
Year:2005
Periodical:South African Journal of Economics
Volume:73
Issue:1
Pages:22-35
Language:English
Geographic term:Subsaharan Africa
Subject:capital movements
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2005.00002.x/pdf
Abstract:The authors assess the degree of capital mobility in sub-Saharan Africa. Using the methodology as proposed by M. Feldstein and C. Horioka (1980) they test the hypothesis of perfect capital mobility against the alternative of imperfect capital mobility. Following A. Vamvakidis and R. Wacziarg (1998) and A. Isaksson (2000), provision is made in their model to show the dependency of the lesser-developed countries on international finance and aid and how a more open economy contributes towards improving the level of capital movement in these countries. They also assess the change in the degree of capital mobility over the time period in an effort to see whether institutional and political changes have been successful. They show that, compared to the region, South Africa is, to a large extent, more developed and should therefore play a leading role in the African Renaissance. Stationary panel data estimation techniques are applied to a sample of 36 sub-Saharan African countries over the time period 1980-2000. The benefits of using one-way error component models are derived from simultaneously employing time and cross-section dimensions of the data, resulting in a substantial increase in the degrees of freedom. The fixed and random effects models make it possible to acknowledge country heterogeneity within the panel, making provision for differences across countries like capital control policies, financial and capital market structures and exchange rate regimes. Bibliogr., note, sum. [Journal abstract]
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