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ID:
170339
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| Summary/Abstract |
China's ‘New Normal’ has been much discussed in recent years. An important aspect of the New Normal is the growth slowdown from levels of around 10% per annum to a more modest 6 or 7%. Not surprisingly, there has been widespread discussion of whether the slowdown is permanent or not and, in either case, what the sources of the slowdown are. However, much of this discussion has been based on informal analysis of the data rather than formal econometric results. We make a move in the direction of formal empirical analysis of this issue by estimating and simulating a vector autoregressive (VAR) model which distinguishes between demand, supply and foreign shocks as possible drivers of changes in economic growth. We analyse both two-variable (growth and inflation) and three-variable (foreign growth, domestic growth and inflation) VAR models and identify demand, supply and foreign shocks, using a modification of the Blanchard-Quah identification procedure. In the two-variable model we identify two shocks (demand and supply) and find that the slowdown since the GFC has been mainly supply-driven. This conclusion is not changed when a foreign growth variable is added to the model and a foreign shock is allowed for – we find that demand continues to be of relatively little importance, that the foreign shock also makes little contribution to explaining the long-run growth decline in China which continues to be driven by long-term supply factors. This conclusion is robust to a number of alternative formulations of the model. Thus, the growth slowdown may, indeed, be characterised as the ‘New Normal’.
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| 2 |
ID:
182515
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| Summary/Abstract |
Africa has experienced over a decade of sustained economic growth. However, since the outbreak of Ebola, there have been pertinent questions as to whether and what extent such outbreaks have developmental implications in the continent. It is in this context that this article investigates whether and to what extent the ongoing COVID-19 pandemic affects the development of Africa’s economies. Using data from various international organizations, we show that the pandemic has indeed slowed down African economies, albeit in differing degrees across various regions of the continent. However, the slowdown is moderate compared with economies in high-income countries and the world economies as a whole. We contend that while it is difficult to predict when the crisis is going to end, the continent can navigate itself out of it by leveraging on the ever-increasing global prices of agricultural products and natural resources.
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