This study is part of a macroeconomic approach and seeks to identify the role of the rate of
economic growth and the exchange rate in controlling the macroeconomic framework. The approaches adopted
in this paper are part of Keynesian thinking on macroeconomic stability using the macroeconomic stability
index proposed by Burnside and Dollars (2004) and A. Amine (2005). Our results argue that economic growth
is causing macroeconomic stability and that the exchange rate is negatively and significantly accounting for
macroeconomic stability in the Democratic Republic of Congo.
Empirical Analysis of Fiscal Dominance and the Conduct of Monetary Policy in ...AJHSSR Journal
The study empirically investigates fiscal dominance and the conduct of monetary policy in
Nigeria, using quarterly data from 1986Q1 to 2016Q4. It adopts the vector error correction mechanism (VECM)
and cointegration technique to analyze the data and make inference. The findings reveal that there is no
evidence of fiscal dominance in Nigeria. The empirical results show that budget deficit, domestic debt and
money supply have no significant influence on the average price level. However, budget deficit and domestic
debt are shown to have significant influence on money supply, but only in the short-run. The policy implication
is that the government should enforce fiscal discipline through the appropriate institution and the Central Bank
should be given autonomy to perform the primary function of long-term price stability, among other functions.
Long Run Impact of Exchange Rate on Nigeria’s Industrial Outputiosrjce
While many scholars have carried out a lot of research on the impact of exchange rate volatility and
price shocks on economic growth, this study departs from previous studies and seeks to provide suggestions for
Nigerian policy makers on the attainment of an ideal exchange rate necessary to boost industrialization and
industrial output. The economies of all the countries of the world are linked directly or indirectly through asset
and goods markets. This linkage is made possible through trade and foreign exchange. The price of foreign
currencies in terms of a local currency (i.e. foreign exchange) is therefore important to the understanding of the
growth trajectory of all countries of the world. The consequences of substantial misalignments of exchange rates
can lead to output contraction and extensive economic hardship. These therefore, bring up the issue of an ideal
exchange rate necessary for the achievement of a set of diverse objectives - economic growth, containment of
inflation and maintenance of external competiveness. This study employed the use of the ordinary least square
technique to examine the impact of exchange rate stability on industry output in Nigeria using annual time
series data from 1980 to 2013. The result of the study showed that domestic capital, foreign direct investment,
population growth rate, and real exchange rate were significant determinants of industrial output. The changes
in external balance and inflation were of little or no consequences to industrial output. Based on the findings,
the researcher recommended that conscious efforts should be made by government to fine-tune the various
macroeconomic variables in order to provide an enabling environment that stimulates industrial output and
eventual economic growth.
Dynamic Impact of Money Supply on Inflation: Evidence from ECOWAS Member Statesiosrjce
According to the monetarists, inflation is essentially a monetary phenomenon in the sense that a
continuous rise in the general price level is due to the rate of expansion in money supply far in excess of the
money actually demanded by economic units. But the link between changes in money supply and inflation is not
instantaneous. This study, therefore, assessed this dynamic linkage between money supply and inflation in
ECOWAS member states; West African Monetary Zone (WAMZ) and West African Economic Monetary Union
(WAEMU) for the period 1980-2012. The stationary properties of the series are explored both at univariate and
panel sense using KPSS and ADF; IPS and LLC. The results revealed that money supply and inflation are
stationary at the level for individual countries and at panel sense. The random effect model for ECOWAS
member states shows that the impact of money supply on inflation is effective in the current and first period.
While the impact is effective in the first period for WAMZ, WAEMU experiences the impact in current period.
The finding also reveals that there are significant specific-country effects on the variables. This implies that the
objective of macroeconomic convergence is yet to be achieved. The paper, therefore recommends that inflation
should be used as an operational guide in evaluating the effectiveness of monetary policy and also a strong
monetary cooperation programme among ECOWAS member states should be evolved.
Abstract
The exchange rates are at the heart of international economic relations and are an integral part of the everyday landscape of economic agents. The Tunisia like the other country is faced with the problem of determination of the rate of exchange that will allow him to achieve the major balances internal and external. The objective of this research is to explain the rate of exchange to the assistance of a number of explanatory variables to enable managers of the economic policy to appreciate in the time their contribution to economic activity. It is clear from the results of this research that have a positive influence on the equilibrium exchange rate while the external capital and the budgetary deficit have a significant negative impact on the equilibrium exchange rate.
Key words:
Exchange rate, budget deficit, exchange term, monetary mass
Empirical Analysis of Fiscal Dominance and the Conduct of Monetary Policy in ...AJHSSR Journal
The study empirically investigates fiscal dominance and the conduct of monetary policy in
Nigeria, using quarterly data from 1986Q1 to 2016Q4. It adopts the vector error correction mechanism (VECM)
and cointegration technique to analyze the data and make inference. The findings reveal that there is no
evidence of fiscal dominance in Nigeria. The empirical results show that budget deficit, domestic debt and
money supply have no significant influence on the average price level. However, budget deficit and domestic
debt are shown to have significant influence on money supply, but only in the short-run. The policy implication
is that the government should enforce fiscal discipline through the appropriate institution and the Central Bank
should be given autonomy to perform the primary function of long-term price stability, among other functions.
Long Run Impact of Exchange Rate on Nigeria’s Industrial Outputiosrjce
While many scholars have carried out a lot of research on the impact of exchange rate volatility and
price shocks on economic growth, this study departs from previous studies and seeks to provide suggestions for
Nigerian policy makers on the attainment of an ideal exchange rate necessary to boost industrialization and
industrial output. The economies of all the countries of the world are linked directly or indirectly through asset
and goods markets. This linkage is made possible through trade and foreign exchange. The price of foreign
currencies in terms of a local currency (i.e. foreign exchange) is therefore important to the understanding of the
growth trajectory of all countries of the world. The consequences of substantial misalignments of exchange rates
can lead to output contraction and extensive economic hardship. These therefore, bring up the issue of an ideal
exchange rate necessary for the achievement of a set of diverse objectives - economic growth, containment of
inflation and maintenance of external competiveness. This study employed the use of the ordinary least square
technique to examine the impact of exchange rate stability on industry output in Nigeria using annual time
series data from 1980 to 2013. The result of the study showed that domestic capital, foreign direct investment,
population growth rate, and real exchange rate were significant determinants of industrial output. The changes
in external balance and inflation were of little or no consequences to industrial output. Based on the findings,
the researcher recommended that conscious efforts should be made by government to fine-tune the various
macroeconomic variables in order to provide an enabling environment that stimulates industrial output and
eventual economic growth.
Dynamic Impact of Money Supply on Inflation: Evidence from ECOWAS Member Statesiosrjce
According to the monetarists, inflation is essentially a monetary phenomenon in the sense that a
continuous rise in the general price level is due to the rate of expansion in money supply far in excess of the
money actually demanded by economic units. But the link between changes in money supply and inflation is not
instantaneous. This study, therefore, assessed this dynamic linkage between money supply and inflation in
ECOWAS member states; West African Monetary Zone (WAMZ) and West African Economic Monetary Union
(WAEMU) for the period 1980-2012. The stationary properties of the series are explored both at univariate and
panel sense using KPSS and ADF; IPS and LLC. The results revealed that money supply and inflation are
stationary at the level for individual countries and at panel sense. The random effect model for ECOWAS
member states shows that the impact of money supply on inflation is effective in the current and first period.
While the impact is effective in the first period for WAMZ, WAEMU experiences the impact in current period.
The finding also reveals that there are significant specific-country effects on the variables. This implies that the
objective of macroeconomic convergence is yet to be achieved. The paper, therefore recommends that inflation
should be used as an operational guide in evaluating the effectiveness of monetary policy and also a strong
monetary cooperation programme among ECOWAS member states should be evolved.
Abstract
The exchange rates are at the heart of international economic relations and are an integral part of the everyday landscape of economic agents. The Tunisia like the other country is faced with the problem of determination of the rate of exchange that will allow him to achieve the major balances internal and external. The objective of this research is to explain the rate of exchange to the assistance of a number of explanatory variables to enable managers of the economic policy to appreciate in the time their contribution to economic activity. It is clear from the results of this research that have a positive influence on the equilibrium exchange rate while the external capital and the budgetary deficit have a significant negative impact on the equilibrium exchange rate.
Key words:
Exchange rate, budget deficit, exchange term, monetary mass
This study examines whether economic stability in Indonesia capable predicted by the model Mundell-Fleming. Prediction proxy stability of the interaction of fiscal and monetary policy. During Indonesia's economic stability is largely determined by the strength of economic fundamentals, while economic fundamentals are strongly influenced by fiscal and monetary policies. Therefore flemming Mundell predicts how strong the economic stability in Indonesia ?, the statement in the analysis by using a long-term predictions are Vector Autoregression. Research findings indicate patterns of interaction predictions variety of fiscal and monetary policy, both short term, medium term and long term. It turned out that fiscal policies are derived from taxes are more effective than government spending to control economic growth, investment and inflation, but government spending is more effective to control the exchange rate. The monetary policy of interest rates more effectively control the exchange rate and inflation, while the money supply is more effective in controlling the growth of economy and investment.
This study examined the nature of the relationship between the macroeconomic variables and share prices using the Nairobi Securities Exchange All Share Index (NASI). The study used four macroeconomic variables namely; interest rate, inflation, exchange rate and gross domestic product (GDP) for the period January 2008 to December 2014. The study found a positive relationship between GDP and NSE share prices. Exchange rate was found to have an insignificant positive relationship with share prices while interest rates had negative relationship with share prices. Inflation rate was found to have significant negative relationship with share prices due to its effect on purchasing power. The study concluded that the four macroeconomic variables combined had strong positive and significant relationship with share prices. The macroeconomic variables accounted for 86.97% of changes in share prices. The study recommended that capital markets regulators and other government regulatory bodies should promote a stable macroeconomic environment in the country for optimal performance of shares and stock market at large.
The Role of Banks in the Propagation of External Shocks to African Economiespaperpublications3
Abstract: The paper examines the role played by banks in the propagation of external shocks to African economies. We employ a general equilibrium model of a small open economy to analyse how the banking sector propagates external shocks. The study uses a vector autoregression (VAR) analysis to assess the impact of exchange rate and foreign interest rate shocks on bank lending spreads and output fluctuations in African economies. We use quarterly time-series data for 5 selected African countries for the period 1990-2011. The findings show that foreign interest rate and exchange rate shocks significantly affect output fluctuations in Africa. The results, however, indicate that banks play limited role in the propagation of shocks to African economies.
Using a series of econometric techniques, the study analysed interaction between monetary policy and private sector credit in Ghana. This study made use of monthly dataset spanning January 1999 to December 2019 of credit to the private sector (PSC) and broad money supply (M2). The results reveal that there exists cointegration, a long run stationary relation between monetary policy and private sector credit. This implies, increases in credit should prompt long-term increases in monetary policy. It is not surprising that growth in the private sector might have a stronger effect on monetary policy. The Error Correction Test is statistically significant and that all the variables demonstrate similar adjustment speeds. This implies that in the short run, both money supply and credit are somewhat equally responsive to their last period’s equilibrium error. There is unidirectional causation from private sector credit to monetary policy. It can be said that, there is an interaction between money supply and private sector credit. Thus, credit to private sector holds great potential in promoting economic growth. It can be recommended to the government to increase the credit flow to the private sector because of its strategic importance in creating and generating growth of the economy.
Policy Research Working Paper - The Experience with Macro-Prudential Policies...M. İbrahim Turhan
M. İbrahim TURHAN - Borsa İstanbul Yönetim Kurulu Başkanı ve Genel Müdürü, BIST Başkanı, Chairman & CEO, www.ibrahimturhan.com.
Policy Research Working Paper - The Experience with Macro-Prudential Policies of the Central Bank of the Republic of Turkey in Response. M. İbrahim Turhan - October 2011
EFFECTIVE MONETARY POLICY AS A RECIPE FOR MACROECONOMIC STABILITY IN NIGERIApaperpublications3
Abstract: The basic objective of this paper was to investigate effective monetary policy as a recipe for macroeconomic stability in Nigeria, using annual time series data from 1981 to 2014. The paper employs OLS methodology with all the BLUE assumption. The results show that considering the magnitude, 1% increase in RGDP (proxy for economic growth) is brought about by 0.86% increase in narrow money supply (M1), 0.63% increase in broad money supply (M2), 258% decrease in inflation rate (INFLARATE), 1276.3% increase in lending rate (LEDRATE), and 143.9% increase in gross fixed capital formation. This implies that an increase in lending rate and other related variables will lead to a significant increase in real GDP, proxy for economic growth in Nigeria. The estimated value of R2 (goodness of fit) of 0.67 or 67% shows that 67% systematic variation in Real GDP is caused by variation in narrow money supply, broad money supply, inflation rate, lending rate, and gross fixed capital formation. This indicates that indeed, monetary policy has an effect on macroeconomic stability in Nigeria. The study seems to suggest that concerted efforts should be made by the government to focus on increment in narrow and broad money supplies which will aid in the financing of the country’s monetary growth, balancing the price increase, stimulating increased spending, and further enhancing the country’s macroeconomic variables.
This study examines whether economic stability in Indonesia capable predicted by the model Mundell-Fleming. Prediction proxy stability of the interaction of fiscal and monetary policy. During Indonesia's economic stability is largely determined by the strength of economic fundamentals, while economic fundamentals are strongly influenced by fiscal and monetary policies. Therefore flemming Mundell predicts how strong the economic stability in Indonesia ?, the statement in the analysis by using a long-term predictions are Vector Autoregression. Research findings indicate patterns of interaction predictions variety of fiscal and monetary policy, both short term, medium term and long term. It turned out that fiscal policies are derived from taxes are more effective than government spending to control economic growth, investment and inflation, but government spending is more effective to control the exchange rate. The monetary policy of interest rates more effectively control the exchange rate and inflation, while the money supply is more effective in controlling the growth of economy and investment.
This study examined the nature of the relationship between the macroeconomic variables and share prices using the Nairobi Securities Exchange All Share Index (NASI). The study used four macroeconomic variables namely; interest rate, inflation, exchange rate and gross domestic product (GDP) for the period January 2008 to December 2014. The study found a positive relationship between GDP and NSE share prices. Exchange rate was found to have an insignificant positive relationship with share prices while interest rates had negative relationship with share prices. Inflation rate was found to have significant negative relationship with share prices due to its effect on purchasing power. The study concluded that the four macroeconomic variables combined had strong positive and significant relationship with share prices. The macroeconomic variables accounted for 86.97% of changes in share prices. The study recommended that capital markets regulators and other government regulatory bodies should promote a stable macroeconomic environment in the country for optimal performance of shares and stock market at large.
The Role of Banks in the Propagation of External Shocks to African Economiespaperpublications3
Abstract: The paper examines the role played by banks in the propagation of external shocks to African economies. We employ a general equilibrium model of a small open economy to analyse how the banking sector propagates external shocks. The study uses a vector autoregression (VAR) analysis to assess the impact of exchange rate and foreign interest rate shocks on bank lending spreads and output fluctuations in African economies. We use quarterly time-series data for 5 selected African countries for the period 1990-2011. The findings show that foreign interest rate and exchange rate shocks significantly affect output fluctuations in Africa. The results, however, indicate that banks play limited role in the propagation of shocks to African economies.
Using a series of econometric techniques, the study analysed interaction between monetary policy and private sector credit in Ghana. This study made use of monthly dataset spanning January 1999 to December 2019 of credit to the private sector (PSC) and broad money supply (M2). The results reveal that there exists cointegration, a long run stationary relation between monetary policy and private sector credit. This implies, increases in credit should prompt long-term increases in monetary policy. It is not surprising that growth in the private sector might have a stronger effect on monetary policy. The Error Correction Test is statistically significant and that all the variables demonstrate similar adjustment speeds. This implies that in the short run, both money supply and credit are somewhat equally responsive to their last period’s equilibrium error. There is unidirectional causation from private sector credit to monetary policy. It can be said that, there is an interaction between money supply and private sector credit. Thus, credit to private sector holds great potential in promoting economic growth. It can be recommended to the government to increase the credit flow to the private sector because of its strategic importance in creating and generating growth of the economy.
Policy Research Working Paper - The Experience with Macro-Prudential Policies...M. İbrahim Turhan
M. İbrahim TURHAN - Borsa İstanbul Yönetim Kurulu Başkanı ve Genel Müdürü, BIST Başkanı, Chairman & CEO, www.ibrahimturhan.com.
Policy Research Working Paper - The Experience with Macro-Prudential Policies of the Central Bank of the Republic of Turkey in Response. M. İbrahim Turhan - October 2011
EFFECTIVE MONETARY POLICY AS A RECIPE FOR MACROECONOMIC STABILITY IN NIGERIApaperpublications3
Abstract: The basic objective of this paper was to investigate effective monetary policy as a recipe for macroeconomic stability in Nigeria, using annual time series data from 1981 to 2014. The paper employs OLS methodology with all the BLUE assumption. The results show that considering the magnitude, 1% increase in RGDP (proxy for economic growth) is brought about by 0.86% increase in narrow money supply (M1), 0.63% increase in broad money supply (M2), 258% decrease in inflation rate (INFLARATE), 1276.3% increase in lending rate (LEDRATE), and 143.9% increase in gross fixed capital formation. This implies that an increase in lending rate and other related variables will lead to a significant increase in real GDP, proxy for economic growth in Nigeria. The estimated value of R2 (goodness of fit) of 0.67 or 67% shows that 67% systematic variation in Real GDP is caused by variation in narrow money supply, broad money supply, inflation rate, lending rate, and gross fixed capital formation. This indicates that indeed, monetary policy has an effect on macroeconomic stability in Nigeria. The study seems to suggest that concerted efforts should be made by the government to focus on increment in narrow and broad money supplies which will aid in the financing of the country’s monetary growth, balancing the price increase, stimulating increased spending, and further enhancing the country’s macroeconomic variables.
The Impact of Monetary Policy on Economic Growth and Price Stability in Kenya...iosrjce
The government of Kenya’s economic blueprint dubbed ‘Kenya Vision 2030’ acknowledges the
importance of maintaining a stable macro-economic environment. Despite Kenya implementing monetary
policy aimed at achieving stable prices and fostering economic growth, the economy has been reporting low
economic growth and high rates of inflation. These implies there is still a point of disconnect between what
Central bank of Kenya Pursues and the outcome of the objectives. In this study, structural vector autoregresion
(SVAR) model is estimatedto trace the effects of monetary policy shocks on economic growth and prices in
Kenya. Three alternative monetary policy instruments were put into use i.e. broad money supply (M3), interbank
lending rate (ILR) and the real effective exchange rate (REER). The study found evidence that monetary policy
innovations carried out on the quantity-based nominal anchor (M3) has modest effects on economic growth and
prices with a very fast speed of adjustment. Innovations on the price-based nominal anchors (ILR and REER)
have relative and fleeting effects on real GDP. The study recommended that Central Bank of Kenya should
place more emphasis on the use of the quantity-based nominal anchor rather than the price-based nominal
anchor
IMPACT OF FISCAL POLICY AND MONETARY POLICY ON THE ECONOMIC GROWTH OF NIGERIA...AJHSSR Journal
ABSTRACT: This research work focused on the impact of fiscal and monetary policy on Nigeria‟s economic
growth between 1980 and 2016. In the study, variables such as government expenditure and taxation revenue
were used to proxy fiscal policy while the broad money supply was employed as a proxy for monetary policy.
The other variable employed as controlled variable is interest rate. The unit root test confirmed that all the
variables were not stationary at levels but were stationary at first difference. Also, the Johansen cointegration
test confirmed that a long run relationship exists between fiscal policy, monetary policy and economic growth in
Nigeria. The empirical results reported using the ordinary least squares technique suggested that fiscal policy
has positive and significant impact on economic growth, and monetary policy has positive impact on economic
growth as well. We, therefore, conclude that both fiscal and monetary policies have positive and significant
impact on Nigeria‟s economic growth between 1980 and 2016. To this end, we recommend that the Federal
Government of Nigeria should focus on using the fiscal policy instruments to stimulate the economy in the
desired direction in order to sustain economic growth process. We also call on the Central Bank of Nigeria to
consistently embark on appropriate and effective monetary policy to boost the economy. Furthermore, since
interest rate is observed to negatively impact economic growth, efforts should be made as lowering the cost of
borrowing in the commercial banks and other financial institutions in order to boost investment and increase
economic growth in the country.
The Nigerian Government both previous and present has introduced several policies and programmes to reduce or proffer remedial measures to militate against the negative impact of high inflationary levels on the Nigerian economy. All these measures have not led to a productive result as the inflation rate has continued to sour higher over the years. This paper aimed at examining the economic influence of the determinant factors that influence inflationary trends that are multi-dimensional and dynamic which continue to defy solutions. The data used for this work was sourced from the National Bureau of Statistics and Central Bank of Nigeria, from 1983 to 2020. The ordinary least square approach was used to analyze the data and the result shows that consumer’s price index, interest rate and total export has a positive effect on Nigeria inflation, but only the Consumer’s Price Index (CPI) have a statistically significant effect on the Nigeria inflation at 99% confidence interval. Result also shows that the exchange rate, foreign reserve, money supply, real GDP, real income and total imports has a negative effect though not statistically significant on the Nigeria inflation rate. The result of the granger causality test shows exchange rate and total imports to granger cause Nigeria inflation. It is recommended that Government should improve locally manufacture products to meet international demands to reduce total imports.
CAPITAL MARKET DEVELOPMENT AND INFLATION IN NIGERIAAJHSSR Journal
ABSTRACT :This study examined the impact of inflation and capital market development in Nigeria. The
ultimate objective of the study is centered on an empirical investigation of inflation and its impact on the growth
of the Nigerian capital market, and also the trend of inflation and capital market development in Nigeria. In
order to achieve these objectives, the study used tables and graphs to examine the trend of inflation and capital
market development in Nigeria. Augmented Dickey Fuller unit root test was used to check the behavior of data,
and the ARDL bound test was used to check if variables are cointegrated. Post estimation test which includes
the serial correlation, heteroskedasticity and the histogram normality test was also conducted. Data were
collected from secondary sources, such as central bank of Nigeria statistical bulletin and the world development
indicator. The unit root test revealed that the financial sector, financial intermediaries and interest rate were
stationary at levels but exchange rate, inflation, government spending and trade openness became stationary
after the first difference. Empirical findings confirmed that there is a statistically significant long- and short-run
negative effect of inflation on capital market development. On the contrary, economic growth has a statistically
significant long- and short-run positive impact on capital market performance. In addition, results confirmed
that there is positive support of the previous financial sector policies on capital market performance in the
current period.
This paper analysed the forecasting ability of yield-curve as a predictor of the short-run fluctuations in economic activities in Namibia. The study employed the techniques of unit root, cointegration, impulse response functions and forecast error variance decomposition on the quarterly data covering the period 1996 to 2015. The results revealed a negative relationship between the term structure of interest rates and economic activities, though statistically insignificant. This suggests that the yield-curve has no forecasting ability as a predictor of economic activity in Namibia.
This paper examines whether the long-run relationship between budget and external deficits follows the
tenets of the twin-deficit hypothesis, the Ricardian equivalence hypothesis, the current account targeting
hypothesis, or the feedback linkages. It also evaluates the effects of budget and trade deficits on economic growth.
On a global perspective, these have been in the recent period debated in developed and developing nations. In
contributing to this ongoing debate, the study applied unit root tests, cointegration analysis, a dynamic vector
error correction model and a multivariate Toda-Yamamoto long -run Granger-causality representation using
annual time series data for Kenya from 1980 to 2016. There is evidence of unidirectional causality running from
budget deficit to external deficit in support of the twin-deficit hypothesis. In the long run, budget deficit had
significant positive effects while trade deficit had significant negative effects, on real GDP growth. Overall, the
findings suggest that the authorities should promote policies that upscale fiscal discipline, curb budget deficits for
external stability and long-term economic growth, in Kenya. The evidence underscores the need for more country
specific studies in sub-Saharan Africa.
MACROECONOMIC FOCUS AND INDUSTRY ANALYSIS .docxsmile790243
MACROECONOMIC FOCUS AND INDUSTRY ANALYSIS 1
MACROECONOMIC FOCUS AND INDUSTRY ANALYSIS 2
Milestone Two
Macroeconomic Focus and Industry Analysis
NOTE: highlighted any change you made. Know which one is revised. Thanks.
Note: See all highlighted on yellow comments and revised it.THANKS.
Macroeconomic Focus and Industry Analysis
Macroeconomic forecast of the monetary school of thought.
From a monetarist perspective, regulation of the flow and circulation of money is important in determining and influencing preferred economic conditions in the United States. Reducing the circulation of money in the economy has many effects on the macroeconomic environment and determines the activities of other stakeholders in the financial market. From a monetarist school of thought, the government has sole responsibility to both country and citizens in ensuring favorable monetary policies are implemented that are akin to the prevailing economic conditions through the control of inflation and prevention of deflation in the country (Fair, 2011).
Reducing the supply of money in the economy has effects on the macro-economic Cory Kanth:
This point is not clear. It needs clarification in terms of better explanation.
environment as earlier mentioned. Reducing money circulation has both short run and a long run effect that shift practices in the economic environment. For instance, consumer spending is affected by the implementation of monetary policies. When the government implements monetary policies that do not favor money circulation, consumer spending capabilities are significantly reduced (Fair, 2011). The reduction in the spending is due to the reduced flow of money in the financial market which limits the funds accessible to consumers in the market. This policy is usually exercised in a bid to control inflation in the market where prices go up due to increased demand catalyzed by the availability of money in the hands of the spenders.
Reducing the growth of money circulation from a monetary perspective is empirical in determining the cost of labor. When there is a circulation of money in the market, individuals can opt for willing unemployment due to the availability of funds through other sources other than the low paying jobs (Gnimassoun & Mignon, 2015). Further analysis on the effect of reducing money circulation is the government stabilizes the prices of labor meaning little choice is left for personnel who may discriminate employment due to reduced wages or low salaries.
Investment spending is a factor directly affected by the increase in interest rates. This is because investors avoid high lending rates due to high interests that are amassed over operational periods. Moreover, increased lending rates affect investment spending since capital and ...
The effect of functionalized carbon nanotubes on thermalmechanical performanc...IJRTEMJOURNAL
The new approaches for preparing nanocomposite coating by modificated carbon nanonotubes
(CNTs) and epoxy resin was done in the study. thermal-mechanical performance of nanocomposite coating was
investigated and the results were reported in this paper. The physic-chemical techniques such as Differential
scanning calorimetry (DSC) and Thermal gravimetric analysis (TGA) were used to characterize the thermal
performance of Epoxy nanocomposite coating. The test techniques for mechanical properties of paint coating as
adhesion, hardness, impact resistance and bending strength were employed in the work. The results indicated
that CNTs were dispersed in epoxy coating with only ratio of 0.1 wt% enhanced the Glass Transition
Temperature (Tg), decomposition temperature of epoxy coating and improved mechanical properties
significantly. Also functionalized CNTs can be reinforced thermal-mechanical of the epoxy coating better than
neat CNTs.
Study of desalination processes of seawater from the desalination plant of La...IJRTEMJOURNAL
The use of water for food purposes requires excellent physicochemical quality. To contribute to
the control of water quality. Water treated by reverse osmosis is aggressive and demineralize can not be used
directly as a source of drinking water. The objective of this work is to study, physics-chemical analyzes of raw
water, pretreated osmosis and treated (permeate) and produced water (reservoir) at the desalination plant of
seawater Laayoune (SDL), located in southern Morocco. For this, we have followed several qualitative
parameters such as pH, conductivity, turbidity
Multi products storage using randomnessIJRTEMJOURNAL
The following Project shows the benefits of a research established into a multi-products
warehouse belongs to an automotive industry supplier. The main goal was applied a tool recognizing the rules
for distribution and material storage. Once the research was completed, the benefits were, the idle times
reduction per hours/week by the two initial processes. The politics for storage assignment and location, propose
a system to improve the space into this areain order to avoid material management and flow issues. It is
important to mention, the system proposed could be applied into warehouses with storage size and space
restricted by sorting area, also different material types, production settings and physical specifications for
which set warehouses with traditional management of distribution without slack, involves lack of materials,
pieces without records, incorrect location assigned, stock error.
Existence results for fractional q-differential equations with integral and m...IJRTEMJOURNAL
This paper concerns a new kind of fractional q-differential equation of arbitrary order by
combining a multi-point boundary condition with an integral boundary condition. By solving the equation which
is equivalent to the problem we are going to investigate, the Green’s functions are obtained. By defining a
continuous operator on a Banach space and taking advantage of the cone theory and some fixed-point theorems,
the existence of multiple positive solutions for the BVPs is proved based on some properties of Green’s functions
and under the circumstance that the continuous functions f satisfy certain hypothesis. Finally, examples are
provided to illustrate the results.
A study on financial aspect of supply chain managementIJRTEMJOURNAL
The more common approaches used in the SCM consider only the physical logistic operations
and ignore the financial aspects of the supply chain. The main objective to incorporate financial aspects in
supply chain management is to strengthen managerial decisions concerning financial flows in supply chains,
while empirical knowledge about financial supply chain management (FSCM) is in its early stages. This paper
presents a model for FSCM which financial planning in addition to operation planning is decided in it. The
main contribution of this paper is to define two approaches for Financial Supply Chain Management and to
compare them. This financial approaches are: Traditional financial approach and new financial approach.
Traditional financial approach integrates physical goods flows and financial flows. New financial approach
considers in making decisions other financial indicators such as market to book value, liquidity ratios, capital
structure ratios, and return on equity, sales margin, turnover ratios and stock security ratios, among others.
Moreover, the new approach applies the change in equity instead of the traditional approach measures of profit
as the objective function to be maximized in the presented model. To show the attributes of the presented
approaches, the results of the new approach and the traditional approach is compared. The findings indicate
that the traditional approach leads to lower change in equity compared to the financial approach. Also, the
results clearly reveal the better improvement of using the new approach over the traditional approach, and
convince the decision makers to take advantage of the new approach.
Rural Livelihood and Food Security: Insights from Srilanka Tapu of Sunsari Di...IJRTEMJOURNAL
Food security is the foremost need of every human society. It is a fundamental right and
government responsibility but still food insecurity is prevalent in rural areas of least developed nations. To cope
with food insecurity, undertaking diverse income generating activities is common as well as key strategy adopted
by rural people. The objective of this study is to assess rural livelihood and food security status of a remote island
named Srilanka Tapu of Sunsari district. A random sampling technique was used to collect primary data from 40
rural household heads using semi-structured questionnaire. Descriptive methods were used for analyzing. The
findings revealed that the food security situation of the Tapu is insecure. Most basic infrastructures and social
services needed for people livelihood such as road, electricity sufficient food availability, education, healthcare,
sanitation, etc. were found to be extremely poor. Most of the households are small scale farmers involving
themselves in diverse livelihood activities which are mostly temporary, low-skilled and low paying. However,
people are fulfilling their food needs at every cost but are highly vulnerable to food insecurity. Also, their lives
security is equally vulnerable because of disastrous Koshi River flooding which occurs every year in the Tapu.
The findings therefore critically suggest that food security of remote and vulnerable human settlements should be
at top priority in policy formulation and implementation level. The study also recommends a need for an in-depth
research for making evidence based policy interventions for improvement of diversify rural livelihood along with
sustainable environment
With mounting concerns over the state of our planet, there is continuing demand that chemists
and chemical engineers should develop greener chemical processes and products. In the 1990s, with the
growing awareness of the hazardous impacts of the chemical industry, the green chemistry revolution was
launched by American chemists Paul T. Anastas and John Warner. Green chemistry is the kind of chemistry that
seeks to minimize pollution, conserve energy, and promote environmentally friendly production. This paper
provides a brief introduction to green chemistry.
Assessment of Building Failure: The Case of Saint Thomas’s Anglican Church, A...IJRTEMJOURNAL
There have been incessant reports of the collapse of buildings resulting in the loss of lives and
properties globally. However, there has been a dearth of information regarding any findings about the collapse
of building structures. An extensive study of causes of selected building collapse in Nigeria and abroad is carried
out in this work by visiting some locations of building collapse, reading journals and newspaper articles on
structural defects and testing rubbles collected from collapsed areas. This study therefore examined the general
causes of the collapse of some buildings particularly the reasons for the collapse of Saint Thomas’s 2-storey
Church Hall, Akure. Laboratory testing was carried out in this study to investigate the causes of collapse using
samples from the site of the collapsed building. An appraisal of the structural drawings of the collapsed building
was also investigated. Findings revealed that the building collapsed due to poor design, bad construction
materials and inadequate supervision. The paper concludes that buildings collapse can be reduced in Nigeria by
avoiding all. It recommended use of only duly registered professionals in the building industry for construction.
Data warehousing is a technique for collecting and managing data from multiple internal and
external sources to provide meaningful business insights. Data warehouses are designed to give a long-range
view of data over time and provide a decision support system environment. They are a vital component of
business intelligence, which is designed for data analysis and reporting. They are used to provide greater
insight into the performance of a business. This paper provides a brief introduction on data warehousing
Resource recycling and waste-to-energy: The cornerstones of circular economyIJRTEMJOURNAL
"Circular Economy" is the pursued goal of sustainable development of mankind for the 21st
century. In short, the fundamental spirit of circular economy is the concept of "Zero Waste". The example used
in our daily lives means 100% of waste treatment, leaving no trace. At this time, it would be an ideal goal that
the waste could be fully recovered into available raw materials or energies. In particular, "waste-to-energy" is
a key factor, because all the wastes are almost related to energy. Resource recycling of waste metal from the
household garbage is the best example. When smelting metals, the refining industry needs to reduce the metal
oxides (mineral materials) to metals, such as steel, aluminium, copper, etc. The reduction processes consume
considerable portion of energy for the entire smelting process, for example, 70.6% for steel and 77.4% for
aluminium. However, if the waste metallic products can be fully recovered, as long as by melting and reshaping,
the original oxide metal reduction processes that consume a lot of energy can be avoided. On the other hand,
when the general garbage cannot be recovered as a resource, they can be converted into fuel or electricity by
biological or thermal treatment. Another more important human waste utilization is the waste paper recycling.
The production of one tonne of raw pulp emits about 6 tonnes of carbon, consuming about 100 cubic meters of
water, using about 200 kilograms of chemical raw materials, and draining 300 tonnes of toxic waste water. The
entire papermaking process is how terrible environmental pollution! The recycled pulp of one tonne can save
energy 10-13GJ.The proportion of paper waste in Taiwan 2015 is 34.69% and the estimated amount is 2.5
million tonnes. If the paper waste could be fully recycled, it could save energy about 0.725 million kloe (kilolitre oil equivalent). In other words, it virtually reduces Taiwan's oil imports of 4.56 million barrels and CO2
emissions of 2.5 million tonnes annually.
Survivin Immunoreactivity in the Gastric Mucosa of Rats Feedind with Carpet S...IJRTEMJOURNAL
Survivin has been studied many times because of its overexpression in several types of cancer
including lung, kidney, skin, endometrium, stomach, colon, breast, prostate, over, hematologic, head and neck
cancers, histopathology features and polymorphisms in the promoter region which belongs to the inhibitör of
apoptosis gene family by researchers. There is no study of survivin immunoreactivity in the gastric mucosa of the
rats fed with carpet shell clam grown in the Dardanelles. In this study, it was aimed to investigate the effects of
carpet shell clam fed rats on survivin production in the gastric mucosa. The carpet shell clam given as food to the
rats were removed from the Dardanelles Çardak region. Four groups of rats are included in the study, group 1
(n=6), control group fed with standard rat food, group 2 (n=6), 75% carpet shell clam and 25% standard rat
food daily, group 3 (n=6), 75% carpet shell clam and 25% standard rat food every two days, group 4 (n=6), 75%
carpet shell clam and 25% standard rat food every three days. To detect survivin localization in the tissues, the
LAB-SA Detection System was used. Survivin immunoreactivity was detected of epithelial cells in the gastric
mucosa of rats fed with carpet shell clam. After the immunohistochemical staining processing all gastric tissue
samples are evaluated in terms of survivin immunoreactivity with light microscopy and image analysis software.
Survivin immunoreactivity was detected 0% in the first group, 83.33% in the second group, 61.83% in the third
group and 32.67% in the fourth group. There was statistically significant difference between the survivin
immunoreactivity in the gastric gland cells of the rats in the experimental and control groups (p> 0.05). Survivin
production in the gastric mucosa of rats suggests that consumption of carpet shell clam may cause tissue damage.
Security and Crime Management in University Libraries in NigeriaIJRTEMJOURNAL
Security and prevention of crime in university library is very paramount duties of librarian. The
survival of a library depends to a large extend on how secured its collections are, security of library resources
constitutes serious challenge facing university libraries in Nigeria. The paper, therefore, investigates security and
crime management in university libraries in Nigeria using university of Jos and university of Ilorin libraries. The
study adopted a descriptive survey method. The population of the study comprised 108 library personnel and
16,012 registered library users in two university libraries. While the sample size consisted of all the 108 library
personnel, and 2% of the registered users to make a total of 428 respondents. Questionnaire and interview with
the university librarians of the selected university libraries were the instruments used for data collection. Data
were analysed using frequency distribution and percentages. Results revealed that security breaches included
stealing/theft of library materials, mutilation of library materials, and non-return of borrowed items. It also
showed inadequate funding, selfish interest of the culprits and lack of institutional security policy in the library.
Base on the findings, that staff security training, electronic security system should be introduced and improve
funding of university libraries among others. Recommendation orientation of users and staff should be done from
time to time in university libraries to mention but few.
Influence of heat treatment on Vitamin C Levels in Oyster MushroomIJRTEMJOURNAL
The study was conducted to investigate the influence of heat treatment during drying process of
Oyster mushroom in the tropics. Mushroom growing is carried out under carefully controlled conditions mostly
in bulk in specific designed tunnels with aerated floors. There are two main purposes, firstly pasteurization; to
free the compost from undesirable microbes and pests and secondly conditioning; to become mushroom specific
by getting clear of ammonia and free of readily available carbohydrates. Through proper manipulation of
temperature and ventilation these two primary objectives are accomplished. Mushrooms have been identified as
an underutilized crop in Africa, with many nutritive and health benefits. It does not require much land and
investment. However, it is highly perishable and there is need to process it to lengthen its shelf life by drying.
However, there is need to ensure that the nutrients are not lost in the process. It is for this reason that this
project investigated the effect of drying on nutrient levels in mushroom. Vitamin C levels were monitored in the
course of drying at 80⁰C, 60⁰C, 50⁰C, 40⁰C and in direct sunlight. It was concluded that the temperature that
gave the best drying rate with minimal nutrient loss was 60⁰C. In general, more than half the Vitamin C is lost
during the range of drying temperatures investigated.
Optimization of Design Parameters for Crane Hook Using Finite Element AnalysisIJRTEMJOURNAL
The Crane hooks are very at risk segments that are regularly utilized for mechanical purposes.
In this way such segments in an industry must be produced and composed in an approach to convey most extreme
execution without failure. Failure of a crane hook essentially relies upon three central point i.e. measurement,
material, overload. The undertaking is worried towards expanding the safe load by fluctuating the cross-sectional
measurements of the four distinct segments and diverse materials. The chose areas are square, circle, and
trapezoidal. The territory stays consistent while changing the measurements of the four unique segments. The
crane hook is demonstrated utilizing catia programming. The pressure and life investigation is finished utilizing
ANSYS 18.1 workbench. The ordinary worry along add up to misshaping, stress and life’s according to the
materials considered. It is discovered that trapezoidal cross segment yields most extreme load of 4000 KG to 5000
KG for steady cross segment zone among four cross segment.
Reserves Estimating Carbon in Forest City District Village Bongohulawa GorontaloIJRTEMJOURNAL
The estimation of Carbon stock and carbon sink in the City Forest of Bongohulawa village,
Regency of Gorontalo (Guided by. The research was aimed to know volume growth of trees planted in the
Village District Bongohulawa Gorontalo, to calculate the volume and content of carbon biomass in the city
forest and green line (left-right path) and average carbon sequestration/tree/species. Research was conducted
in village of Bongohulawa during 4 (fourth) month; started from March until June 2011. The execution of data
collecting [of] was performed within this research area-location through observation and measurement of trees
and forest stand. For green line research area 100% inventory was upllied and for City Forest line plot
sampling was implemented. For city forest sample plots measurement was conducted in 10 sample units (each
unit sampling of 0.25 ha). Tree diameter, tree hight (total and commercial hight) and crown diameter of all tree
species within research line (green line) and research plots (city forest) was measured. Based on the research
data and its calculation, the results show that: Casuarina junghuhiana can store more carbon than other tree
species. From the inventory conducted in 3 km of green line along the road (6 meters width observations) of the
village Bongohulawa, 366 trees (consist of 7 tree species) were measured. Those tree species namely Casuarina
junghuiana 102 trees, sandalwood 46 trees, mango 7 trees, jackfruit 6 trees, Albizia 1 tree, mahogany 202 trees,
headland 2 trees. Crown cover of those tree species is 3032.54 m2
. The result of calculation also indicated that
Casuarina has higher carbon stock than other tree species that is 33.56 tons (equal with 52% of total crbon
stock). Further calculation indicated that during the period of 19 years (since 1992) Casuarina can strocked
carbon average of 1.77 tons/year. The average diameter increment of individual Casuarina tree species is about
1.72 cm/year. Furthermore, for Swietenia magrophilla King, with an average diameter increment of 1.40
cm/year, the leaves of this tree species can absorbed carbon of 18.1233 tons within green line of both sides of
the road. For research plots within City Forest which located in the valey the results of the research show that
the crown cover of 124 trees is about 1,359.67 m2, then carbon absorbtion is about 0.15 ton/tree or about 7.8
kg/tree/year. Within the research area of City Forest (located both in the valey and hill) totally there are 1,353
trees (consist of 13 tree species) and carbon absorption of the canopy is about 25.521 tons. Further calculation
results also indicated that carbon absorption of small trees ( poles) is about 25.521 tons and for sapling is
about 78.163 tons or 39,0815 tons/ha then fionally for mature trees is about 39.813 tons or 15,925 tons/ha.
An Analysis of Tourism Competitiveness Index of Europe and Caucasus: A Study ...IJRTEMJOURNAL
This study aims to find the association-ship between the Regional Rank of the Travel and
Tourism Competitiveness Index and its Indicators in 37 European countries. The cross-sectional data of the 37
European countries are collected from the World Economic Forum report- 2015. The statistical software
package, SPSS v. 20.0 is used to analyze the data. ANOVA (Analysis of Variance), Multi-co-linearity, Multiple
Regression, and Residual Analysis are the tools used to analyze to achieve out the objective of the study. RR:
Regional Rank of the Travel and Tourism Competitiveness Index is used as the dependent variable and TI:
Tourism Services Infrastructure, GP: Ground & Port Infrastructure, BE: Business Environment, PT:
Prioritization of Travel and Tourism, and CR: Cultural resources & business travel are used as the independent
variables. It is found that there is an inverse relationship between the dependent variable and all the
independent variables along with the statistical significance. It is recommended that the governments of the
European countries and the respective agents of these countries should be made aware of learning the findings
of this study to promote their countries which can be victorious in lowering their Regional Rank of the Travel
and Tourism Competitiveness Index.
Translation Errors of Public Signs in English Subtitle: Residents’ Poor Forei...IJRTEMJOURNAL
China is in an Age of Economy Thriving and Technology Advancing. This strike
increasing international visitors. In the foreigners, very few of them are able to communicate in
Chinese, which means that it is significant to provide accurate information to the foreign friends by
their understandable codes. For instance, in a hotel, a foreigner needs to know which way to go for
their daily activities without enquiring at the reception desk. These requirements are served by public
signs, e.g. the location of a canteen. Actually, this service is a challenge of Chinese people’s English
level. In recent years, as a lack of contextually linguistic and cultural knowledge, there are some
errors of translation on public English signs, resulting in some inconvenience to the oversea
travelers. This paper will analyses these problems in root and then advance prospective resolutions.
What are the determinants of the non-reimbursement for SMEs in Central Africa...IJRTEMJOURNAL
This article aims to determine the factors that are the cause of the non-repayment of credits
received from financial institutions by Cameroonian SMEs. This choice is sometimes. This non-repayment is
often caused by factors related to the environment and the functioning of SMEs. It aims to analyze and highlight
the factors that put Cameroonian SMEs in a situation of inability to repay the receivables received from
financial institutions. To achieve this goal, we opted for a mixed approach: Inductive (exploration on the
ground) and hypothetico deductive. To do this, we first analyzed the content of the interviews conducted with 15
SME managers and owners and tested data collected from a questionnaire administered face-to-face with 185
Cameroonian SMEs. . We used descriptive analysis and explanatory analysis. Our results show that the tax rate,
the mismanagement of managers, poor accounting and unforeseen situations have a significant positive
influence on the non-repayment of loans, while the age and size of SMEs exert significant negative influence on
the non-repayment of loans by Cameroonian SMEs.
Multivariate regression methods with infrared spectroscopy to detect the fals...IJRTEMJOURNAL
Recently, food safety and guaranteed of food marks have become more important subjects of
foodstuff production and the marketing of processed foods. This paper demonstrates the ability of Mid Infrared
spectroscopy coupled with multivariate regression tools to detect vegetable butter (as adulterant) in a binary
mixture with traditional cow’s butter. Blends of traditional cow’s butter with different percentages of vegetable
butter were measured using Attenuated Total Reflectance-Fourier Transform Mid Infrared Spectroscopy (ATRFTMIR). Spectral and reference data were firstly analyzed by principal component analysis (PCA) to check
outliers samples; and improve the robustness of the prediction models to be established. Multivariate regression
methods as Principal component regression (PCR) and Partial least square regression (PLSR) were used to
establish calibration model. Excellent correlation between ATR-FTMIR analysis and studied butter blends was
obtained R2 = 0.99; with Root Mean Square Errors of Prediction < 3.04, Limit of Detection 9.12% (By PCR)
and 6.06% (by PLSR), and Relative Prediction Errors as low as 3.13.
An Analysis of Tourism Competitiveness Index of Europe and Caucasus: A Study ...IJRTEMJOURNAL
This study aims to find the association-ship between the Regional Rank of the Travel and
Tourism Competitiveness Index and its Indicators in 37 European countries. The cross-sectional data of the 37
European countries are collected from the World Economic Forum report- 2015. The statistical software
package, SPSS v. 20.0 is used to analyze the data. ANOVA (Analysis of Variance), Multi-co-linearity, Multiple
Regression, and Residual Analysis are the tools used to analyze to achieve out the objective of the study. RR:
Regional Rank of the Travel and Tourism Competitiveness Index is used as the dependent variable and TI:
Tourism Services Infrastructure, GP: Ground & Port Infrastructure, BE: Business Environment, PT:
Prioritization of Travel and Tourism, and CR: Cultural resources & business travel are used as the independent
variables. It is found that there is an inverse relationship between the dependent variable and all the
independent variables along with the statistical significance. It is recommended that the governments of the
European countries and the respective agents of these countries should be made aware of learning the findings
of this study to promote their countries which can be victorious in lowering their Regional Rank of the Travel
and Tourism Competitiveness Index
Water scarcity is the lack of fresh water resources to meet the standard water demand. There are two type of water scarcity. One is physical. The other is economic water scarcity.
Cosmetic shop management system project report.pdfKamal Acharya
Buying new cosmetic products is difficult. It can even be scary for those who have sensitive skin and are prone to skin trouble. The information needed to alleviate this problem is on the back of each product, but it's thought to interpret those ingredient lists unless you have a background in chemistry.
Instead of buying and hoping for the best, we can use data science to help us predict which products may be good fits for us. It includes various function programs to do the above mentioned tasks.
Data file handling has been effectively used in the program.
The automated cosmetic shop management system should deal with the automation of general workflow and administration process of the shop. The main processes of the system focus on customer's request where the system is able to search the most appropriate products and deliver it to the customers. It should help the employees to quickly identify the list of cosmetic product that have reached the minimum quantity and also keep a track of expired date for each cosmetic product. It should help the employees to find the rack number in which the product is placed.It is also Faster and more efficient way.
CFD Simulation of By-pass Flow in a HRSG module by R&R Consult.pptxR&R Consult
CFD analysis is incredibly effective at solving mysteries and improving the performance of complex systems!
Here's a great example: At a large natural gas-fired power plant, where they use waste heat to generate steam and energy, they were puzzled that their boiler wasn't producing as much steam as expected.
R&R and Tetra Engineering Group Inc. were asked to solve the issue with reduced steam production.
An inspection had shown that a significant amount of hot flue gas was bypassing the boiler tubes, where the heat was supposed to be transferred.
R&R Consult conducted a CFD analysis, which revealed that 6.3% of the flue gas was bypassing the boiler tubes without transferring heat. The analysis also showed that the flue gas was instead being directed along the sides of the boiler and between the modules that were supposed to capture the heat. This was the cause of the reduced performance.
Based on our results, Tetra Engineering installed covering plates to reduce the bypass flow. This improved the boiler's performance and increased electricity production.
It is always satisfying when we can help solve complex challenges like this. Do your systems also need a check-up or optimization? Give us a call!
Work done in cooperation with James Malloy and David Moelling from Tetra Engineering.
More examples of our work https://www.r-r-consult.dk/en/cases-en/
Immunizing Image Classifiers Against Localized Adversary Attacksgerogepatton
This paper addresses the vulnerability of deep learning models, particularly convolutional neural networks
(CNN)s, to adversarial attacks and presents a proactive training technique designed to counter them. We
introduce a novel volumization algorithm, which transforms 2D images into 3D volumetric representations.
When combined with 3D convolution and deep curriculum learning optimization (CLO), itsignificantly improves
the immunity of models against localized universal attacks by up to 40%. We evaluate our proposed approach
using contemporary CNN architectures and the modified Canadian Institute for Advanced Research (CIFAR-10
and CIFAR-100) and ImageNet Large Scale Visual Recognition Challenge (ILSVRC12) datasets, showcasing
accuracy improvements over previous techniques. The results indicate that the combination of the volumetric
input and curriculum learning holds significant promise for mitigating adversarial attacks without necessitating
adversary training.
Welcome to WIPAC Monthly the magazine brought to you by the LinkedIn Group Water Industry Process Automation & Control.
In this month's edition, along with this month's industry news to celebrate the 13 years since the group was created we have articles including
A case study of the used of Advanced Process Control at the Wastewater Treatment works at Lleida in Spain
A look back on an article on smart wastewater networks in order to see how the industry has measured up in the interim around the adoption of Digital Transformation in the Water Industry.
Industrial Training at Shahjalal Fertilizer Company Limited (SFCL)MdTanvirMahtab2
This presentation is about the working procedure of Shahjalal Fertilizer Company Limited (SFCL). A Govt. owned Company of Bangladesh Chemical Industries Corporation under Ministry of Industries.
Overview of the fundamental roles in Hydropower generation and the components involved in wider Electrical Engineering.
This paper presents the design and construction of hydroelectric dams from the hydrologist’s survey of the valley before construction, all aspects and involved disciplines, fluid dynamics, structural engineering, generation and mains frequency regulation to the very transmission of power through the network in the United Kingdom.
Author: Robbie Edward Sayers
Collaborators and co editors: Charlie Sims and Connor Healey.
(C) 2024 Robbie E. Sayers
Macroeconomic stability in the DRC: highlighting the role of exchange rate and economic growth
1. Invention Journal of Research Technology in Engineering & Management (IJRTEM)
ISSN: 2455-3689
www.ijrtem.com Volume 2 Issue 8 ǁ August 2018 ǁ PP 64-74
|Volume 2| Issue 8 | www.ijrtem.com | 64 |
Macroeconomic stability in the DRC: highlighting the role of
exchange rate and economic growth
Nyamugira Biringanine Alex1
, Kabuya Kazenga Simon, PhD2
1
(Department of Economics, Economics Faculty/ Evangelical University in Africa, UEA Bukavu, DRC)
2
(Formerly at Department of Business, Economics Faculty/ University of Neuchâtel, Switzerland)
ABSTRACT : This study is part of a macroeconomic approach and seeks to identify the role of the rate of
economic growth and the exchange rate in controlling the macroeconomic framework. The approaches adopted
in this paper are part of Keynesian thinking on macroeconomic stability using the macroeconomic stability
index proposed by Burnside and Dollars (2004) and A. Amine (2005). Our results argue that economic growth
is causing macroeconomic stability and that the exchange rate is negatively and significantly accounting for
macroeconomic stability in the Democratic Republic of Congo.
KEYWORDS: Economic growth, error correction model, exchange rate, macroeconomic stability,
macroeconomic stability index
I. INTRODUCTION
The Democratic Republic of Congo présents a macroeconomic Framework that has been hit hard by the effets of
war, political instability, and unpredictable monetary policy. The objective of this work is to detect the role of
exchange rate policy (through the exchange rate) as well as the level of production on macroeconomic stability
in the DRC. According to the economic literature, macroeconomic stability presupposes the reduction of the
level of inflation (around 5% per year) and the elimination of its volatility (the difference between the inflation
rates of two or more successive periods must be close to zero). Exchange rate policy is at the center of economic
policy debates in both industrialized and developing countries. From 1973, the major industrialized countries
(United States, Japan and Germany) adopted floating exchange rate regimes. In Europe, there was subsequently
the establishment of monetary and exchange rate cooperation which eventually led to the adoption of the Euro.
In developing countries, the evolution of exchange rate policy has been much more heterogeneous. Some
countries have adopted flexible exchange rate regimes and others have chosen to fix the exchange rate of their
Currency against one or more foreign currencies. Between the two extremes, a wide variety of intermediate
regimes has developed and many countries have also changed exchange rate regimes several times in Latin
America, Africa or Asia.
In addition, it is recognized that the exchange rate system has effects on macroeconomic volatility. Indeed, the
exchange rate policy can influence this relationship by modifying the direct impact of volatility on growth. For
example, foreign exchange policy can alter the impact volatility has on growth by affecting the economy's ability
to adjust to volatility. Thus, for the same level of volatility, the cost of growth induced by volatility will differ
according to the exchange rate system in force. Similarly, the impact of the exchange rate regime on volatility
may depend on country characteristics such as the level of financial or economic development (Rogoff et al,
2004) [1].
During the 1990s, which was marked by socio-political instability brought about by the process of
democratization, the Congolese Economy experienced a multi-faceted crisis characterized notably by the
degradation of basic infrastructure and the looting of the production Tool, the breakdown of structural
cooperation with the international community resulting in the drying up of external aid and foreign investment,
the expansion of chronic deficits in state operations and their financing by printing money, leading to
hyperinflation and sharp depreciation of the national currency and the multiplicity of exchange rates (Central
Bank of Congo, 2012) [2]. Indeed, throughout the 1990s and early 2000s, the Congolese Economy accumulated
several macroeconomic imbalances. The Congo's external accounts thus recorded serious deficits in the current
account, with close to 12% of GDP. They were covered by an accumulation of arrears of external debt payments.
In parallel with these external deficits, the State has steadily accumulated fiscal deficits (7% of GDP on average
until 1998), financed exclusively by advances from the Central Bank. The national currency has not withstood
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the damage caused by strong and variable inflation. It was quickly abandoned by economic agents in favor of
stable foreign currencies and more particularly for the benefit of the US dollar. In addition, it should be noted
that since 2001, the Central Bank of Congo conducts its exchange rate policy as part of a floating exchange rate
regime. Taking into account, on the one hand, the significant impact of exchange rate fluctuations on the
behavior of domestic prices and, on the other hand, the need to protect the economy against negative balance of
payments shocks, the Central Bank of Congo has set itself two objectives in terms of exchange rate policy,
namely: smooth exchange rate fluctuations in order to preserve the stability of the external value of the national
currency and increase the level of foreign exchange reserves ( Central Bank of Congo, 2013) [3].
In the light of the foregoing, we will try throughout this essay to answer the Following question : What is the role
of the exchange rate and the level of production on macroeconomic stability in the Democratic Republic of
Congo ?
Theoretical Overview : The link between macroeconomic stability, economic growth and the exchange rate
suffers from sufficient and relevant literature. Nevertheless, some research has focused on the influence that
macroeconomic stability has on the link between FDI (Foreign Direct Investment) and growth. On this question,
the most notable contribution is that of Bleaney (1996) [4]. From a sample of developing countries, the author
shows that over the 1980-1990 period, macroeconomic stability is associated with stronger growth for a given
rate of investment (domestic and foreign).
The interpretation of this finding is that Sound macroeconomic management (with, for example, a low inflation
rate) creates a more secure overall environment for investors, thereby promoting growth. At the same time,
macroeconomic stability, like political stability, is one of the major determinants of the attractiveness of the
country for foreign investors. In another work (Gbakou, Sadni Jallab and Sandretto, 2008) [5] have attempted to
evaluate the influence that macroeconomic stability could have on the impact of FDI in North African and
Middle East countries. The authors were able to highlight the fact that FDI promotes growth provided that the
inflation rate is kept at a sufficiently low level, with a threshold effect that they have attempted to quantify.
Contrary to this research, ours attempts to evaluate the cause-and-effect relationship between macroeconomic
stability, economic growth and the exchange rate in the Democratic Republic of Congo. We will therefore seek
to see simultaneously the cause of economic growth, macroeconomic stability and the exchange rate.
Stability, Currency and Welf are : The question of welfare is not separable from the way of looking at time. In
a static or pseudo static perspective, welfare is the characteristic of an equilibrium and will be determined by the
influence of this or that particular variable on this equilibrium. Thus, the holding of idle cash balances associated
with a positive nominal interest rate reduces the welfare of consumers. Their elimination and the increase in the
level of welfare require a zero nominal interest rate, ie a negative inflation rate when the natural real interest rate
is positive. Similarly, price rigidities, in the face of positive technological shocks, not only keep the product
below its natural level, but are also an obstacle to the necessary restructuring and hence cause the decline in
productivity gains (and competitiveness in an open economy). They reduce welfare. Their elimination calls for
structural reforms in the direction of greater flexibility in product and labor markets (Lucas, 2001) [6].
The underlying theory of welfare is, however, questionable. It ignore the temporal articulation of imbalances and
their effect in terms of wealth creation and the use of resources. In fact, it ignores the question of stability. From
an evolutionary perspective, it is difficult to arrive at a quantifiable conclusion about overall welfare. Current
imbalances are undoubtedly a source of a loss of welfare, but only in the light of a situation of inter-temporal
equilibrium. What really counts is the sequence of imbalances over time, which by definition escapes the
dynamic general equilibrium models. Thus, that inflation constitutes a harmful tax in an equilibrium environment
is trivial. On the other hand, the cost of a monetary regime under the random walk is much less so (Leijonhufvud
1984/2000) [7] [8]. The uncertainty and volatility of the expectations that this regime contributes to make
persistent, if not increasing inflation, fuel a decline in investment incentives and a real loss of welfare. In
addition, a monetary regime that guarantees a Near equilibrium investment with transient inflationary pressures
is fueling growth and hence welfare gains. Current imbalances in the form of excess demand are unavoidable if
we want to have future production capacity that will extinguish inflationary pressures. That the public deficit is
harmful in an equilibrium environment is just as trivial. The risk of instability is much less. The public deficit is
an imbalance that responds to imbalances that preceded it and generates future imbalances. Thus, deficits, far
from being the result of bad government behavior, may simply be the means to respond to inappropriate
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Behavior of financial actors, to avoid the bankruptcy of these actors and to prevent an economic depression. This
is what recent experience in most countries of the world teaches, as was the experience of the Latin American
countries (Leijonhufvud 2009) [9]. So, of course, these deficits are likely to lead to new taxes or a tax in the
form of inflation. But, on the one hand, these deficits were both necessary and unavoidable, on the other hand,
what will happen to the solvency of governments will depend on what will happen to the growth that depends in
part on the deficits in question. That's why the question is not trivial. That's why the enactment of a rule against
budget deficits to protect against future inflation is absurd. It is a question of compensating the deficits of the day
by the surpluses of tomorrow and not of ab initio abolishing the deficits.
Both monetary policy and fiscal policy are there to contain instability that is inherent in a market economy
subject to structural change. They are there to smooth the imbalances, to allow that they compensate the selves in
time, not to claim to eliminate them. They alone are not enough for this task.
Macroeconomic Framework of the DRC ;The DRC recorded strong macroeconomic results during the five-year
period 2010-2015. Gross domestic product (GDP) growth estimates for this period stand at 7.58% in real terms
compared with 3.30% a decade earlier (Table 1). Taking advantage of a favorable global environment, the
country continues to benefit from significant financial and trade flows related to trade with non-European
countries. Growth continues to be driven by the mining sector and, in particular, copper production which has
increased by 52% in volume. The trade and building sectors are also performing well according to the IMF
report (IMF, 2014) [10].
Regarding the inflation rate and the exchange rate, it should be noted that inflation has decreased significantly
with time. Indeed, the average inflation rate stood at 6.17% during the 2010-2015 five-year period, when it stood
at 99.37% a decade earlier. According to the IMF, this decline could be explained by a restrictive fiscal policy,
the control of monetary aggregates and the absence of major shocks on import prices. On the exchange rate side,
there is a significant increase during the period 2000-2015; Nevertheless, it must be noted that the exchange rate
remained remarkably stable during the five-year period 2010-2015. According to the IMF, this situation could be
explained by the accumulated international reserves ($50 million in 2013) which have only made it possible to
maintain the level of import coverage at 7.7 weeks of imports of goods and services (IMF, 2014). From the
above, we conclude that the Congolese economy has returned to a state of stability much more interesting than in
previous years as shown by the indicator of economic growth rate and inflation (Table 1). This situation was also
supported by Ngonga Zinga (2003) [11] who showed how the DRC regained relative stability following the
implementation of economic programs. Indeed, the author showed in his research that the inflation rate measured
by the general index of consumer prices on the Kinshasa markets and calculated by the Central Bank of Congo
was reduced from 511% in 2000 to 9.8% in 2004 while in 2002 the growth rate returned to the positive zone, for
the first time in 20 years.
Starting from this situation, we will examine the source of the macroeconomic stability that can have a monetary
origin (materialized by the exchange rate in the present work) or a real origin (materialized by the national
production).
Table 1
Analysis of indicators of macroeconomic stability
Period 1980-1989 1990-1999 2000-2009 2010-2015
Mean Min Max Mean Min Max Mean Min Max Mean Min Max
GDP
Growth
rate (in
%)
1.81 -1.27 5.54 -5.47 -
13.47
0.70 3.30 -6.91 6.74 7.58 6.86 8.97
Inflation
(en %)
56.95 23.82 104.07 3367.18 29.15 23773 99.37 2.8 513.91 6.17 1.63 15.32
Exchange
rate
(FC/USD)
3.31 1.2 9.33 1.98 1 5.19 414 21.82 809.79 919.36 905.91 925.98
Source: Our production using data from the World Bank and the BCC.
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II. METHODOLOGICAL APPROACH
Many studies have relied on inflation to measure macroeconomic stability in both developed and
underdeveloped countries. It is therefore the neoclassical monetarist approach that tends to consider
macroeconomic stability as primarily a question of price stability in the medium and long term. Unlike
monetarists, Keynesians believe rather that macroeconomic stability is assured when there are no significant
imbalances in underemployment. As part of our research, we will not use the monetarist approach but we will
adopt the approach chosen by Burnside and Dollars (2004) [12] as well as A. Amine (2005) [13], which takes
into account three indicators to calculate the macroeconomic stability index. Indeed, to measure macroeconomic
stability, Burnside and Dollar (2004) consider that the calculation of the macroeconomic stability index should
be done. According to them, this index brings together three elements that are necessary and occupy a key place
in the measurement of macroeconomic stability. These indicators identified by these two authors are : the budget
surplus, the inflation rate and the opening rate in the same "Policy" variable. These are the indicators used to
explain macroeconomic stability in 56 underdeveloped countries.
The model proposed by Burnside and Dollar (2004) is given by the following relation:
Policy = 1.28 + 6.85 Budget surplus – 1.4 Inflation + 2.16 Openness (1)
Study variables
The Macroeconomic Stability Index (ISM): We used the Macroeconomic Stability Index to measure
macroeconomic stability in the DRC. For the chosen period, we will have to calculate the macroeconomic
stability indices with a view to relating them to the exchange rate and other explanatory variables. This indicator
will be calculated using the model proposed by Burnside and Dollar (2004) above. The calculation of this index
is made possible by the knowledge of the weighted inflation rate, openness rate and budget deficit of their
respective coefficients as calculated by Burnside and Dollar. Parallel exchange rate (TCP): This indicator refers
to the value of a national currency relative to another foreign currency (the dollar in this case). The exchange
rate index is an indicator by which external shocks affect the level of inflation. An increase in this rate implies a
nominal appreciation of national currency. In addition, the exchange rate policy can have effects on inflation,
through the trade balance. Indeed, by playing on the value of the national currency, the State can favor the export
(by depreciating its currency) or make the import less expensive (by appreciating its currency). This last solution
can be useful to reduce inflation, especially when it comes to imported inflation. Appreciating money can also,
theoretically, act on demand by slowing it down, which can lead to lower prices (and hence lower inflation) if
inflation is caused by too much demand. The growth rate of GDP (CROIS): Economic growth is considered one
of the most exciting phenomena in macroeconomics because all countries aspire to well-being and the latter is
not possible without growth. It is measured by the rate of increase in GDP. In this research we will take into
account real GDP.
From the above, our specified model is formalized as follows:
(2)
Data source : The database we use in this study is compiled from the World Bank's "World Development
Indicators" (WDI) 2015 CD-ROM and supplemented by data from the Central Bank of Congo. The period
considered is between 1980-2015. The choice of the World Bank's database as the source of our data was
motivated by our desire to have reliable data with the understanding that the World Bank site is the most reliable
source of data for R & D. Congo. This choice would prevent us from having in our possession masked data that
does not reflect reality.
Estimation technique: To estimate our model, we will first report the stationarity of the variables to be used as
well as their cointegrations. This is necessary because the economic and financial variables are rarely
realizations of stationary processes on the one hand, and on the other hand to analyze the long-term relationships
between the variables under study.
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The non-stationarity of the variables is a very recurrent characteristic. It can give rise to fallacious regressions. In
this case, only one solution is possible: a cointegration relation when the linear combination of several non-
stationary variables in the same degree is stationary.
In practice the unit root tests are based on the modeling of a series by an autoregressive process AR (p):
tit
p
i
i
t YX += −
=
1
The simplest case is that of a random walk:
(3)1 ttt YY += −
The general idea of the Dickey Fuller test is to determine whether the series has a unit root. To do this, various
tests exist: the simplest is the Dickey-Fuller test which assumes:
H0: ρ = 1, H1: ρ <1
From the model (3) we subtract both sides by Yt-1 we will have:
( ) tttttttt YYYYYY +−=+−=− −−−− 1111 1
( )41 ttt YY += −
Where δ = (ρ-1) and Δ = the first difference of Yt
In practice instead of estimating the model (3) we estimate the model (4) and we test the null hypothesis that δ =
0 or ρ = 1 (the series is nonstationary) against the alternative hypothesis δ 0 or ρ <1 (the series is stationary).
If we test the stationarity of a series, in which we include its tendency and its constant, by the test of Dickey
Fuller (DF) starting from the model (4) we will have:
(5)110 tttt YY +++= −
With regard to stationarity, it should be noted that two non-stationary series (Yt ~> I (1) and Xt ~> I (1)) are said
to be cointegrated if we have:
(6)I(0)~>ttt baXY =−−
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The series and Xt are then noted:
Xt, Yt ~> CI (1,1) (7)
In general, if Xt and Yt are two series I(d) then it is possible that the linear combination εt = Yt - aXt - b is not
I(d) but I (d-b) where b is a positive integer (with 0˂ b ≤ d). The vector (1-a-b) is called "cointegrating vector”.
The series are then cointegrated (Xt, Yt ~> CI (d, b)).
Finally, the Error Correction Model (ECM), which reconciles the non-stationarity of variables and cointegration,
will be estimated in order to give us information on the short-term behavior of our series as well as the dynamics
of long term. Indeed, if we have two cointegrated series ( ~> I(0)), we can estimate the following
error correction model (ECM):
(8)0with)( 11 ttttt baXYXY +−−+= −−
We can notice that the parameter δ must be negative so that there is a return of Yt to its long-term equilibrium
value which is (aXt-1 + b). Indeed, when Yt-1 is greater than (aXt-1 + b), there is a restoring force towards the
long-term equilibrium only if δ˂0. The ECM can be used to jointly model the short-term (represented by the first
difference variables) and the long-term (represented by the level variables) dynamics. The short-term dynamics
is written:
(9)XX t1-t3t2110 ++++= −tt YY
The long-term dynamic is expressed as follows:
(10)b t++= tt aXY
because in the long run, we have Yt-1 = Yt and Xt-1 = Xt.
III. RESULTS
The data used in this research covers the period from 1980 to 2015 in order to get an idea of the trend evolution
of the macroeconomic quantities under analysis.
Table 1
Stationarity test result
Variables A Level First difference
ADF Seuil t-stat Prob ADF Seuil t-stat Prob
ISM -5.269715 1% -4.243644 0.0007* Stationary at the level
5% -3.544284
10% -3.204699
CROIS -0.442248 1% -4.252879 0.9816 -4.457353 1% -4.252879 0.0060*
5% -3.548490 5% -3.548490
10% -3.207094 10% -3.207094
TCP -1.842232 1% -4.252879 0.6618 -3.547397 1% -4.252879 0.0501***
5% -3.548490 5% -3.548490
10% -3.207094 10% -3.207094
Source : Our confection with Eviews 7
*; **; *** indicates the significance at the respective thresholds (Seuil) of 1%; 5% and 10%
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The null hypothesis of non-stationarity of the variable under study will be rejected in case the Student's statistic
is lower than the Augmented Dickey Fuller (ADF) test value. We can also rely on the critical probability by
rejecting the null hypothesis when this probability is below the significance level (1%, 5% or 10%). As a result,
we find that the macroeconomic stability index variable is stationary at the 1% level. This variable shows
macroeconomic instability during the period under study (-1272.74 on average) with high volatility.
It is clear that the GDP/capita (Gross Domestic Product per capita) variable is not stationary at all thresholds but
becomes stationary in first difference at the 1% threshold. This variable indicates a low level of production in the
DRC since during the period under study, it is 356.32 USD per capita and per year with high volatilities locating
its standard deviation at 163.7 USD. Finally, the exchange rate indicator responds to a first difference
stationarity at the 10% threshold. This variable has an average value of 269.74 FC/USD with high volatilities,
setting its standard deviation at 360.97 FC/USD. This can be read directly by looking at the maximum value
which is at 925 FC/USD whereas at a certain period the Zaire/USD exchange rate was 1.00. Zaire is the old
name of the Congolese franc.
Table 2
Result of the cointegration test
Sample (adjusted): 1980 2015
Included observations: 30 after adjustments
Trend assumption: Linear deterministic trend (restricted)
Series: ISM CROIS TCP
Lags interval (in first differences): 1 to 2
Unrestricted Cointegration Rank Test (Trace)
Hypothesized Trace 0.05
No. of CE(s) Eigenvalue Statistic Critical Value Prob.**
None * 0.576053 49.58947 42.91525 0.0094
At most 1 0.349722 21.27061 25.87211 0.1683
At most 2 0.192820 7.068869 12.51798 0.3374
Max-eigenvalue test indicates 1 cointegrating eqn(s) at the 0.05 level
* denotes rejection of the hypothesis at the 0.05 level
**MacKinnon-Haug-Michelis (1999) p-values
Source: Our confection with Eviews 7
As a reminder, the cointegration test (Johansen's approach, 1998) [14] proposes maximum likelihood estimators
to test the cointegration of series by performing a cointegration rank test. It is therefore necessary to identify the
long-term equilibrium relationship between two or more variables by searching for the existence of a
cointegration vector. As a result, the test indicates the presence of a single long-term relationship as indicated by
the maximum likelihood test. This allows us to retain the error-correcting model that gives both the long and
short-term trend (see equation (2)).
Table 3
Causality test: Granger approach
Pairwise Granger Causality Tests
Sample: 1980 2015
Lags: 2
Null Hypothesis: Obs F-Statistic Prob.
CROIS (GDP/Cap) does not Granger Cause ISM 34 2.86221 0.0734
ISM does not Granger Cause CROIS (GDP/Cap) 0.02445 0.9759
TCP (XRate) does not Granger Cause ISM 34 0.41264 0.6657
ISM does not Granger Cause TCP (XRate) 0.09849 0.9065
TCP does not Granger Cause CROIS 34 0.60248 0.5542
CROIS does not Granger Cause TCP 1.58453 0.2223
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Source: Estimate made using Eviews 7
This analysis will allow us to get an idea of the causality between macroeconomic stability, the economic growth
rate and the exchange rate in the DRC. The causality assumption will be validated when the probability
associated with the confidence level is less than 10%. Thus, we find that the growth rate of the economy is the
only magnitude that causes macroeconomic stability in the DRC and this unequivocal relationship starts from
economic growth towards macroeconomic stability. That said, improving the level of production in the DRC
would improve the macroeconomic framework.
Table 4
Result of the estimation of the model with error correction
Source : Estimate made using Eviews 7
JB=0,60 (Prob : 0.7415) ; LM stat=2,26 (Prob : 0,4445) ; White test (chi-sq)=97,6 (Prob : 0,0000)
The estimated error correction model is globally significant with respect to the F-stat value (with a probability of
0.0000), which leads us to validate the relevance of our model. In addition, the error correction model is suitable
for our study given the significance, attached to a negative value, of the restoring force coefficient. There is
therefore an error-correcting mechanism: in the long term, the imbalances between macroeconomic stability,
economic growth and the exchange rate are offset so that the two series have similar evolutions. Indeed, the error
correction coefficient represents the speed at which any imbalance between the desired and actual levels of
macroeconomic stability is absorbed in the year following any shock. This means that we are able to adjust
71.16% of the imbalance between the desired and actual level of macroeconomic stability in the DRC. Thus,
shocks on macroeconomic stability are corrected to 71.16% by the effect of "feedback"; in other words, a shock
in one year is fully absorbed after one year, ten months and 28 days.The value of the Breush-Godfrey test
indicates that the errors are independent at the 5% threshold. In addition, the hypothesis of absence of
heteroskedasticity is rejected with respect to the statistical value of the test of White while the hypothesis of
normality of the residues is accepted at the 5% threshold with respect to the probability associated with the
statistic of Jarque-Bera. Before proceeding to the analysis of the variance that will allow us to see the degree of
explanation of the exogenous variables selected for the forecast error of the macroeconomic stability, we say that
the macroeconomic stability is explained and that on the statistical level by the exchange rate in a short-term
dynamic.
1 La variable « indice de stabilité macroéconomique n’a pas été transformée en logarithme étant donné qu’elle renferme certaines variables
négatives.
Dependent Variable: D(ISM)1
Method: Least Squares
Sample (adjusted): 1980 2015
Included observations: 36 after adjustments
Variable Coefficient Std. Error t-Statistic Prob.
C 158.0690 13140.05 0.012030 0.9905
DLOG(GDP/Cap) 5407.488 6950.542 0.777995 0.4431
DLOG(XRate) -4103.716 614.1272 6.682193 0.0000
D(ISM(-1)) -0.522663 0.093644 -5.581368 0.0000
LOG(GDP/Cap(-1)) -22.70670 2177.916 -0.010426 0.9918
LOG(XRate(-1)) -211.1150 292.8505 -0.720897 0.4769
R-squared 0.755270 Mean dependent var 3.400019
Adjusted R-squared 0.711568 S.D. dependent var 7802.208
S.E. of regression 4190.246 Akaike info criterion 19.67769
Sum squared resid 4.92E+08 Schwarz criterion 19.94705
Log likelihood -328.5208 Hannan-Quinn criter. 19.76955
F-statistic 17.28232 Durbin-Watson stat 1.796536
Prob(F-statistic) 0.000000
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Table 5
Outcome of the analysis of variance decomposition: Macroeconomic Stability Indicator
Source: Authors’ Analysis Using Eviews 7
The results of the variance decomposition indicate that the variance of the forecast error of macroeconomic
stability is for 82.2% due to its own innovations (budget balance, Inflation and trade opening rate), for 15.5 % to
economic growth and only for 2.3% to the exchange rate.
IV. ECONOMIC LOOK AT THE RESULTS
We have selected two sets of indicators to explain macroeconomic stability in the Democratic Republic of
Congo: one is monetary and the other is from the real sector.
Real Sector Indicator: Gross Domestic Product: Economic growth is not statistically significant in the DRC,
that is, macroeconomic stability is not explained by economic growth in the DRC in a long-term and short-term
dynamics. On the other hand, the causality test indicates that economic growth causes macroeconomic stability
in the DRC at the 10% threshold. This result leads us to say that achieving a certain level of stability in the DRC
implies a considerable improvement in economic growth. This situation can also be explained by an actual
production below the potential of the economy as underlined by a BCEAO research (BCEAO, 2012). This result
is similar to that found by K. Leo Spencer and O. Mahamat (2014) who found a lack of correlation between
economic growth and inflation in the Central African Monetary Union. The authors suggest that this situation
could be explained by the low banking rates in the Union countries and by the weakness of the business climate
which limits the ability of banks to distribute credit from the savings collected. This situation significantly
alleviates the demand pressures that may arise from revenues from the exploitation of mineral resources and
commodities in the Union. Indeed, the rate of banking that is represented in the database of the World Bank
(Word Development Indicator) by automated teller machines (per 100,000 adults) was 1.14% in 2014 while the
depth of the financial system calculated as the ratio of credit to the private sector and GDP was 6.76% in 2015.
The shallow depth of the financial system in a context of bank over-liquidity could be associated with the
weakness of the business climate, notably the lack of quality financial information that may justify the reluctance
of banks to distribute bank credit to small and medium-sized enterprises. Contrary to the results of our analyzes,
the results found by N. Muganza (2015) [15] confirm a long-term negative relationship between economic
growth and the inflation rate in the DRC at the 5% level. Indeed, according to the author's results, it can be
observed that inflation negatively affects economic growth in the DRC by a phenomenon of stagflation ie the
coexistence of persistent inflation and the decline in the level of production. As a result, the cost of inflation
(growth loss induced by high inflation) is extremely high. These results are similar to those found by Ndiaye and
MA Konte (2012) who argue that, in the DRC, recurring fluctuations in inflation have generated a very high
average inflation rate, to the detriment of the economy by not favoring the economy investment and savings.
Monetary Sector Indicator : Our analyzes show that in the short term the exchange rate is statistically
significant and negatively affects macroeconomic stability in the DRC at the 1% level. The same result shows us
that there is no causal relationship between the exchange rate and macroeconomic stability. Thus, in the short
term, when the exchange rate increases by 1%, macroeconomic stability is expected to decline by 4103.72. This
result provides ample evidence that macroeconomic stability depends to a large extent on exchange rate control
and also points to a persistent depreciation of the national currency of DRC against the dollar. Indeed, the
rapidity of the response of macroeconomic stability in the DRC to exchange rate fluctuations can be explained
Variance Decomposition of ISM:
Period S.E. GDP/Cap XRate ISM
1 5687.785 0.532741 0.406343 99.06092
2 6158.102 15.01233 0.417697 84.56997
3 6238.421 15.32215 1.520550 83.15730
4 6265.189 15.54737 1.993686 82.45895
5 6277.662 15.51013 2.273333 82.21654
Cholesky Ordering: PIBHAB TXCHANGE ISM
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either by price flexibility, especially imported end products, or by an accommodating and unreliable monetary
policy. Devereux (2001) [16] has found that in some (mostly underdeveloped) countries, importers immediately
adjust their prices in proportion to their rising costs as a result of the depreciation of the exchange rate. Taylor
(2000) [17] suggests that if firms lack confidence in monetary policy, then they do not delay in passing on their
price increases to prices, as they do not see that this exchange rate depreciation could be transitory. These results
are consistent with those found by N. Muganza (2015) who shows that in the DRC, any depreciation of 1% of
the national currency leads to a price increase of 1.8% in the short term and 0.26% in the long term. According
to the author, this situation is explained by a strong dollarization of the Congolese economy that pushes
economic agents to divest themselves of the national currency in favor of the foreign currency (the US dollar).
In addition, our analyzes show that the exchange rate is not acting on the economic growth of the DRC in a long-
term dynamic. This situation is explained, and according to economic theory, by the fact that for some time the
DRC's monetary policy has focused on the control of inflation. In such a situation, changes in the exchange rate
do not affect the trend inflation rate.
V. CONCLUSION
The objective of this article focused on the macroeconomic stability of the DRC was to show the role of the rate
of economic growth and the exchange rate in the mastery of the macroeconomic framework. The analysis of
macroeconomic stability is based on two approaches: one termed neoclassical monetarist and which assumes that
macroeconomic stability is based on price stability in the medium and long term. This approach has been the
subject of much research in both industrialized and underdeveloped countries. The second approach is that of
Keynesians and considers that macroeconomic stability is based on the absence of significant underemployment
imbalances. Our approaches have been aligned in this second approach using the Macroeconomic Stability Index
developed by Burnside and Dollars (2004) and A. Amine (2005). The data used in this study come from the
World Bank database (WDI) and are complementarily supplemented by data from the Central Bank of Congo
for the period 1980-2015. The stationarity test applied in this study shows that only macroeconomic stability is
stationary at the level when the economic growth rate and the exchange rate are stationary in first difference. The
cointegration test demonstrates the presence of a long-term relationship, which has led us to retain error
correction modeling in order to have the long-term and short-term trend. Our results show that economic growth
is the only size that causes macroeconomic stability, which means that the attainment of a desired level of
macroeconomic stability is caused by the real sector. Nevertheless, this indicator proved statistically insignificant
to explain the macroeconomic stability of the DRC. This situation is explained by the low production of the DRC
which seems to be below the potential of its economy, low rates of banking in the DRC as well as the inadequacy
of the business climate limiting the ability of banks to distribute credit from the savings collected. Regarding the
exchange rate, our results reject the hypothesis of causality between the exchange rate and macroeconomic
stability in the DRC, while arguing that the increase in the exchange rate is detrimental to macroeconomic
stability in a short-term dynamic term. Nevertheless, the exchange rate does not explain macroeconomic stability
in the long term. These results thus reveal that the DRC can escape the negative effects of exchange rate
volatility by adopting a monetary policy focused on the control of inflation. In addition, the results of the
variance decomposition indicate that the mastery of macroeconomic stability largely depends on the control of
the budget balance, inflation and the market opening rate at 82.2%. Finally, we do not claim to have all analyzed
in this article, and we encourage further research on this topic of macroeconomic stability in the DRC or other
developing countries.
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Nyamugira Biringanine Alex , Macroeconomic stability in the DRC: Highlighting the role of exchange
rate and economic growth. Invention Journal of Research Technology in Engineering & Management
(IJRTEM), 2(8), 64-74. Retrieved from www.ijrtem.com.