Input delays, firm dynamics and misallocation in Sub-Saharan Africa (with Immo Schott). Review of Economic Dynamics, Volume 53, July 2024, Pages 147-172
Abstract: We quantitatively analyze the macroeconomic consequences of border delays in Sub-Saharan Africa. Delays of imported intermediate inputs lower aggregate output because of factor misallocation and due to an inefficiently low number of firms that uses foreign inputs in production. Our model economy features heterogeneous firms that endogenously differ in the degree to which foreign inputs are used. The model is calibrated to micro-level data from Sub-Saharan Africa. Reducing border delays can increase aggregate output by up to 9.4%. The gains are mainly due to a reallocation of economic activity towards more productive firms.
Economic integration and synchronization of growth cycles in the WAEMU zone: a dynamic panel approach (with Cheikh Tidiane Ndiaye and Papa Daouda Amad Diene). Revue internationale des economistes de langue française, Vol. 4, N°2, 2019.
Abstract: The purpose of this article is to find out how the degree of synchronization of real growth cycles in WAEMU is changing and to what extent does economic integration impact this synchronization. To answer these questions we introduced a new measurement approach and a dynamic panel type modeling estimated by the two-step conditional generalized moments method proposed by Arellano and Bond (1991) ; Bover and Blundell (1998). Our empirical analyzes have shown that the interrelationships between the UEMOA economies in terms of trade are very limited. Nevertheless, the bilateral synchronization of cycles, although weak, evolves since 2006. According to our empirical investigations, in sum, we can say that the results obtained suggest that the key determinants of the synchronization of the economic growth cycles in the UEMOA are the synchronization of the previous period, differences in production patterns, differences in inflation, and common external shocks.
The Impacts of Migrants' Transfers of Funds on Economic Growth and Living Standards in the WAEMU Zone (With Rémy HOUNSOU and Varelle Priskine FETUE DJEPE). Case Studies Journal ISSN (2305-509X) – Volume 6, Issue 10 Oct-2017.
Abstract: This study examines the impacts of migrants’ transfers on economic growth and social welfare in the WAEMU zone. A model of simultaneous equations in panel data is developed to compensate for the endogeneity and simultaneity of the variables, and whose estimation is performed by the two-stage least squares techniques using instrumental variables. In addition, a composite social welfare indicator was constructed on which the impacts of migrants’ transfers of funds were assessed. The results indicate that financial development is the main channel for indirect transmission of the effects of migrant transfers on economic growth. However, we did not detect a direct effect in one direction or the other between growth and transfers. Nonetheless, they have positive and very significant impacts on the welfare of the population. Also, the democratic variables introduced into the models impact positively economic growth and the standard of living in the WAEMU zone.
Analysis of the Impacts of Exchange Rate Variations on the Benin Economy: The Case of the FCFA and the Naira (with Rémy Hounsou and Ahassane Camara). International Journal of Management Sciences and Business Research, July-2017 ISSN (2226-8235) Vol-6, Issue 7.
Abstract: Benin shares with Nigeria, about 773 kilometers of land border. The two countries are linked by very long sociocultural and historical relationships. Beyond these affinities, their geographical proximity allows them to trade based on their economic disparities. Consequently, Nigeria's economic shocks have repercussions on Benin, in this case those of its currency. In particular, the decision of the Central Bank of Nigeria in June 2016 to let the exchange rate of the currency fluctuate freely has seriously affected the Beninese economy. This study assesses the impacts of a variation in the exchange rate between the CFA and the Naira on Benin using a computable general equilibrium (CGE) model. Thus, we were able to prospect the probable impacts of a common currency (ie a unit exchange rate) for Benin and Nigeria. Our results showed that the known decline in naira prices in June 2016 compared to 2010 had a negative and severe effect on government revenues, which declined by 19.6% for export taxes and 14.4% for internal market taxes (including imports). Similarly, the decline resulted in a sharp decline in inflation of 14% and nominal GDP of 12.4%, while real GDP rose by 2.2%. Consumption fell by 12.3% at 13.8% for rural households as against 10.9% for urban households. Thus, the depreciation of the Naira is proving to be a source of deepening inequality in Benin. This decline in Naira prices also affects employment and drives the economy towards trade and services to the detriment of productive sectors such as agriculture and industry. It penalizes unskilled workers while skilled workers take refuge in the administration. We conclude that overall, Benin is favored by a strong Naira rather than a weak Naira. In particular, a common currency scenario is not favorable for Benin.
Structural Transformation and Export Diversification (With Nicholas Stains). IMF Country Report No. 24/52, 2024.
Abstract: Cameroonian authorities aim for the structural transformation of the economy and export diversification because of their well-known benefits. They intend to achieve this objective through import substitution policy. However, empirical literature points out that horizontal policies, such as investments in human capital and infrastructure and governance improvement, are not only the most effective to foster structural transformation and export diversification, but also a necessary condition for the success of any industrial policy. Therefore, it is advisable that the authorities concentrate efforts on those areas as a priority because the country's related performance has substantial deficits.
Climate Change in Cameroon: Key Challenges and Reform Priorities (With Asel Isakova, Balazs Stadler, and Kaihao Cai). IMF Country Report No. 24/52, 2024.
Abstract: This paper establishes that Cameroon is highly vulnerable to climate change, with risks from recurrent droughts, floods, landslides, and coastal erosion. While some areas are less vulnerable to climate risks, all regions face their specific challenges, and failing to address them may lead to spillovers to other regions and the economy as a whole. If not appropriately addressed, climate change could delay human capital accumulation and jeopardize development and inclusive growth. As recommandation, the paper proposes to build on the country's national strategies and plans and on the diagnostics on climate change to address key climate-related policy challenges, including creating an enabling environment for policy implementation, with appropriate institutional and public financial management frameworks; strengthening the national disaster risk management framework to step up adaptation efforts; and leveraging fiscal management in forestry as a climate mitigation policy.
Les minorités visibles nées au Canada: l'angle mort des politiques d'intégration au marché du travail (with Brahim Boudarbat). Cirano, Rapport de Projet 2023RP-27, 2023.
Abstract: The report presents the latest developments on the situation of immigrants and visible minorities in the Quebec and Canadian labor markets. In 2021, immigrants represented 14.6% of the Quebec population and 23% of the Canadian population. In Quebec, the unemployment rate of immigrants has fallen sharply over time, but immigrants are still more exposed to unemployment and hold lower-paid jobs than native-born Canadians. As for visible minorities, their proportion of the population was 16.1% in Quebec (26.5% in Canada) in 2021. In addition, nearly one in four Quebecers under the age of 25 (22.2%) is a member of a visible minority, a reality that the labour market will have to deal with, and that public policy decision-makers need to take into account. Our findings suggest that labour market integration in Quebec and Canada is determined more by belonging to a visible minority than by being an immigrant. Even if they were born in Canada, members of visible minorities seem to have difficulty finding a place in the job market. In a context where Quebec and Canada are seeking to recruit more workers from abroad to deal with labor shortages, logic would suggest that we first realize the full potential of the working-age population already here. In addition, the situation of young Canadians from visible minority backgrounds deserves special attention to avoid the risks of their socio-economic exclusion and the consequences this could have on social cohesion.
Informality as a stepping stone in developing countries: the role of financial constraints
Abstract: The macro-development literature on informality in developing countries overlooked transition from informality to formality. Using the World Bank Enterprise Surveys data, I document that an important proportion of formal firms in Sub-Saharan Africa were informal at start. Cross-country analysis shows that the proportion of once-informal among formal firms is positively correlated with financial constraint and tax administration hurdles. Then I develop a structural dynamic general equilibrium model of heterogeneous firms facing financial constraints in the form of collateral requirements that accounts for the transition from informality to formality. The trade-offs imply that financial constraints not only delay some firms transition, but also prevent others that start with low assets from ever transitioning although their productivity warrants being formal. I calibrate the model to Nigeria data and use it to assess different informality-related policies. The results show that reducing the costs of formality, improving access to finance and/or firms’ productivity can significantly reduce informality and improve aggregate TFP. Moreover, reducing informality is associated with substantive gains of output and government tax revenue. In particular, reducing profit tax from 30% to 15% can reduce informality rate by 39 percentage points and increase the government tax revenue to GDP ratio by 8 percentage points.
Time Delays at the Borders: Macroeconomic Consequences for Sub-Saharan African Economies [2023]
Abstract: Time delays to clear imported inputs are longer in Sub-Saharan African countries than in advanced economies. In some countries, the average clearance delay exceeds a month while it is about five days or less in Germany, Greece, Ireland or Thailand. This paper argues that these delays generate input disruptions in Sub-Saharan Africa and quantifies their effects. To this end I develop a dynamic general equilibrium model where firms' foreign inputs are subject to random time delays. After calibrating the model to the data, I simulate a scenario where the average border delay is reduced to one week or less. I found that firms place higher foreign input orders in the baseline model to self-insure against ex-ante risk of input disruptions. However, aggregate foreign input is lower in steady state due to ex-post realizations of the delays. In the counterfactual, eliminating the delays induces aggregate output to increase by up to 10% and employment by up to 5.8%. These gains are driven mainly by a substantial increase of foreign inputs use.
Impact of Climate and Governments Measures on COVID-19 Spread : Evidence from Data (with Lucien Chaffa and Abdoul Haki Maoude ) [July, 2020]
Abstract: This paper investigates the effects of climate and governments responses on the spread of the COVID-19. Our strategy is empirical. Our model is based on an accounting equation derived from the SIR model, and estimates the relationship between the growth of the daily COVID-19 confirmed cases on the one hand, and climatic variables (such as the daily average temperature and the wind speed) and governments responses to COVID-19 on the other hand. We also develop a theoretical approach to test the presence of a threshold in the effect of the temperature on the COVID-19 spread. Using a panel data on a sample of 294 territories overs 106 days (from 22 January, 2020 to 06 May, 2020), we find significant negative effect of temperature and temperature variability and significant positive effect of wind speed and precipitation on the growth of the COVID-19 confirmed cases. We also find that governments responses are associated to a lower growth of confirmed cases. But we do not find any universally applicable threshold effect in the relationship between the average temperature and the confirmed cases growth.
Roadblocks, Time Delays and Bribery on Interstate Roads: the Effects on Regional Trade Integration in West Africa , with Lucien Chaffa
Abstract: It is a well-known fact that regional trade within Africa is low compared to other regions in the world. In this paper, we rely on the Improved Road-Transport Governance reports to construct a novel data set that measures trade-related roadblocks, time delays, and bribes on eight interstate roads in Western Africa between 2006 and 2013 to investigate their effects on bilateral trade in the region. These interstate roads connect three landlocked countries -- Burkina Faso, Niger, and Mali -- to other coastal countries. We document that roadblocks, delays and bribes are pervasive on the roads. During goods transportation trucks experience up to more than 25 controls, are delayed by up to more than 5 hours, and pay between 45 and 115 US dollars bribe. Our empirical analyses show that the delays seriously impede bilateral trade between the connected countries while corruption tends to match the ``grease the wheels'' theory.