Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75488 
Year of Publication: 
1999
Series/Report no.: 
CESifo Working Paper No. 203
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper examines the role of external shocks in explaining macroeconomic fluctuations in African countries. We construct a quantitative, stochastic, dynamic, multi-sector equilibrium model of a small open economy calibrated to represent a typical African economy. In our framework, external shocks consist of trade shocks, modeled a s fluctuations in the prices of exported primary commodities, imported capital goods and intermediate inputs, and a financial shock, modeled as fluctuations in the world real interest rate. Our results indicate that while trade shocks account for roughly 45 percent of economic fluctuations in aggregate output, financial shocks play only a minor role. We also find that adverse trade shocks induce prolonged recessions.
Subjects: 
Trade shocks
dynamic stochastic quantitative trade model
African economies
Document Type: 
Working Paper
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