Paper on Capital inflow and growth in sub Saharan Africa using the pooled mean group estimator

Hello check out my new research output on the impact of capital inflow in growth in sub Saharan Africa using the pooled mean group estimator published at the Romanian economic journal.
Going through the work I did with my colleagues you would get to understand the rationale behind the technique.
To get the code for pmg on stata, you can add a comment Or send me a mail.
The link to the paper is http://www.rejournal.eu/article/pooled-mean-group-estimation-capital-inflow-and-growth-sub-saharan-africa

Paper on Inflation

Hello,  my new publication done along with some colleagues examined the precussors of inflation in Nigeria between the economic space of 1981-2014 in a time series framework. Result showed that money supply and lending interest rates are determinants of inflation in Nigeria within the period of estimation. The result also shows that no significant relationship exists between output and inflation and as such output growth can be targeted without it having an impact on inflation.
It should be noted that this result might not conform to present situations of inflation in Nigeria due to present changes in the Nigerian economy.
Please get a copy from here: www.ajes.ro/current_issue/
You can also drop a comment if you need any info or suggestion.

Harvard and MIT professors win 2016 nobel in Economics

Two professors from Harvard and MIT have been awarded the Nobel Prize in economics for contributions to contract theory -- the agreements that shape business, finance and public policy.
Oliver Hart, 68, a British economist teaching at Harvard, and Bengt Holmström, 67, a Finnish economist teaching at MIT, were announced as the winners Monday by the Royal Academy of Sciences in Stockholm, Sweden.
"Contracts are essential to the functioning of modern societies," the academy said in its announcement. "Hart's and Holmström's research sheds light on how contracts help us deal with conflicting interests."
What they won for
Among the contracts they have studied is Holmström's research on employment contracts, including between CEOs and shareholders.
"In economics we don't really take a stand on the size of the bonus, though they seem extraordinarily high," Holmström told reporters when asked about the multi-million-dollar bonuses paid to modern CEOs.
Hart's research has looked at whether providers of public services, such as schools, hospitals, or prisons, should be publicly or privately owned. The research showed that "incentives for cost reduction are typically too strong," the academy said. Privatizing those types of services can lead to a reduction in quality greater than the advantages of cost savings.

Nigeria's Economy slips into recession

Nigeria has slipped into recession, with the latest growth figures showing the economy contracted by 2.06% between April and June.


The country has now seen two consecutive quarters of declining growth, the usual definition of recession.
Its vital oil industry has been hit by weaker global prices, according to the Nigerian Bureau of Statistics (NBS).

Crude oil sales account for 70% of government income.
The price of oil has fallen from highs of about $112 a barrel in 2014 to below $50 at the moment.

Outside the oil industry, the figures show the fall in the Nigerian currency, the naira, has hurt the economy. It was allowed to float freely in June to help kick-start the economy, but critics argued it should have been done earlier.

Nigeria, which vies with South Africa for the mantle of Africa's biggest economy, is also battling an inflation rate at an 11-year high of 17.1% in July.
"A lot of Nigeria's current predicament could have been avoided," said Kevin Daly from Aberdeen Asset Management.

"The country is so reliant on oil precisely because its leaders haven't diversified the economy.
"More recently, they have tried, and failed, to prop up the naira, which has had a ruinous effect on the country's foreign exchange reserves and any reputation it might have had of being fiscally responsible."

Analysis: Martin Patience, BBC Nigeria correspondent
This economic recession comes as no surprise to millions of Nigerians. Many say they've never known it so tough.
The slump in global oil prices has hit Nigeria hard. The government depends on oil sales for about 70% of its revenues.

But critics say government policies made a bad situation even worse. The decision to delay devaluing Nigeria's currency meant many businesses struggled to get foreign currency to pay for imports, which had a cooling effect on the entire economy.

Following enormous pressure, the government changed tack this summer, allowing the naira to float.
That's led to a spike in inflation, but the hope is that it will attract foreign investors. The government also says the country needs to import less: it wants to see more products made in Nigeria.

Source: BBC

4.58 million Nigerians became jobless under Buhari's administration

The Nigerian Bureau of Statistics (NBS) says the total number of Nigerians who became unemployed within the first and second quarter of 2016 now stands at 2.6 million.

According to the bureau, about 1.46million Nigerians became unemployed in the third quarter of 2015, while another 518,102 became unemployed in the fourth quarter of 2015.

This brings the total freshly unemployed persons in the economy to a record high of 4,580,602, since President Muhammadu Buhari took office in May 2015.

In its second quarter unemployment and underemployment report released on Wednesday, NBS said the country’s unemployment rate grew from 12.1 percent in the first quarter of 2016 to a record high of 13.3 percent in the second.

“During the reference period, the number of unemployed in the labour force increased by 1,158,700 persons, resulting in an increase in the national unemployment rate to 13.3% in Q2 2016 from 12.1 in Q1 2016, 10.4% in Q4 2015 from 9.9% in Q3 2015 and from 8.2% in Q2 2015,” NBS said.

“In view of this, there were a total of 26.06 million persons in the Nigerian labour force in Q2 2016, that were either unemployed or underemployed compared to compared to 24.5 million in Q1 2016and 22.6 million in Q4 2015.”

The economically active population or working age population (persons within ages 15- 64) increased from 106million in Q1 2016 to 106.69 million in Q2 2016, the report added.

Underemployment in the economy was also on the rise, with 15.4 million Nigerians said to be underemployed.

“The number of underemployed in the labour force (those working but doing menial jobs not commensurate with their qualifications or those not engaged in full-time work and merely working for few hours) increased by392,390 or 2.61%, resulting in an increase in the underemployment rate to 19.3 % (15.4million persons) in Q2 2016 from 19.1% (15,02 million persons) in Q1 2016, 18.7% (14.42 million persons) in Q4 2015, from 17.4% (13.2 million persons) in Q3 2015 and 18.3% (13.5 million persons) in Q2 2015.

”There were a total of 26.06 million persons in the Nigerian labour force in Q2 2016, that were either unemployed or underemployed compared to compared to 24.5 million in Q1 2016 and 22.6 million in Q4 2015.

Source: Nairaland.com

CBN reinstate 9 banks suspended from FOREX market

The Central Bank of Nigeria ( CBN ) has reinstated the nine banks that were recently suspended from the foreign exchange market.

They were suspended last week for failing to remit about$ 2.3 billion funds of the Nigerian National Petroleum Corporation (NNPC) to the Treasury Single Account (TSA) of the federal government

The CBN Director of Banking Supervision, Mrs. Tokunbo Martins, who announced the reinstatement in Abuja , Wednesday, explained that the apex bank took the decision after the banks presented repayments plans.

See list of the banks barred from forex transactions


United Bank for Africa (UBA) -$530m;

First Bank of Nigeria (FBN)- $469m;

Diamond Bank Plc-$287m;

Sterling Bank Plc-$269m;

Sky Bank Plc -$221m;

Fidelity Bank -$209m;

Keystone Bank- $139;

First City Monument Bank (FCMB) -$125m;

and Heritage Bank-$85m, totaling .

CBN raiaes monetary policy rate to 14%

The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, has announced that the Monetary Policy Committee(MPC) voted to raise its Monetary Policy Rate (MPR) to 14%. The committee voted to raise the MPR by 200 basis point in a move which shocked many analysts who projected that the apex bank would hold MPR at 12%.

According to the governor, 8 out of the 10 members of the committee were in attendance at this month’s MPC meeting, of this number, 5 voted to raise MPR while 3 voted to maintain status quo.

MPC however retained Cash Reserve Ratio (CRR) at 22.5%, while Liquidity Ratio and the asymmetric corridor remain at 30% and +200-500 basis point respectively.
Emefiele said sluggish growth in the global economy, the Brexit vote, as well as weak growth in the United States all contributed to curtail expectation of global financial prosperity.
Faced with an environment of rising inflation, the MPC was faced with the twin goals of either voting to restart growth or fighting inflation, Emefiele said.

According to the CBN governor, the Committee is concerned about the need to urgently diversify the economy into agriculture, manufacturing, and services in order to rise above its current state. “The Committee expresses satisfaction with banks with regards to credit to the private sector, and encourages commercial banks to keep up the tempo, so as to grow the economy,” Emefiele said.

MPC members call on the Federal Government to fast track the implementation of the 2016 budget and drew attention to the depressing implication of non-payment of salaries.

Naira falls to 360 against the US dollar.

Again naira dips against the US dollars.
The naira fell to 360 against the United States dollar at the parallel market on Wednesday as the supply of the greenback waned at the foreign exchange market.

The local currency had closed at N354 against the greenback on Tuesday.

The naira has been experiencing high volatility since the beginning of the week, as supply gap at the interbank forex market continues to weigh on the parallel market.

The naira, which closed at 348 against the greenback at the parallel market on Friday, dropped to 351 on Monday before plunging further to 354 on Tuesday.

Foreign exchange dealers, who linked the development to dollar scarcity, said inadequate liquidity in the forex market was making the naira to depreciate very fast.

Currency analysts and experts said there was a need for the Central Bank of Nigeria to address liquidity issue at the interbank market in order to resolve the matter.

“It all comes back to liquidity, that is what drives the market, the Chief Executive Officer, Nigeria, Renaissance Capital, a United Kingdom-based investment bank, Mr. Temi Popoola, said.

Corroborating this view, a currency analyst at Ecobank Nigeria, Mr. Kunle Ezun, said, “It is basically one thing – the supply side; activities are still currently low at the interbank market

“Nothing much is really happening on the supply side of the market. Liquidity issue is still there. We actually felt that foreign investors should have been coming in by now.”

The President, Association of Bureau De Change Operators, Aminu Gwadabe, said the volatility at the parallel market this week could be traced to the activities of currency speculators.

The naira had recorded relative stability against the dollar throughout last week, trading between 246 and 248 at the interbank market.

The ABCON president, however, said supply was still an issue, noting that currency speculators were taking advantage of the supply gap at the interbank market to fuel spike in the exchange rate at the parallel market.

Gwadabe explained, “A huge amount of demand is going to the parallel market. People can’t even get $1,000 for their Personal Travel Allowance; banks said they didn’t have. I think there is a need for the CBN to do something about the forex distribution channel. I believe it is only the BDCs that can do the distribution effectively.

“As much as possible, we want to be patriotic and work with the regulators as BDC operators. The parallel market operators are happy with this spike. It is high time the CBN checkmated this spike. The BDCs can be empowered by giving them access to the Diaspora remittances or the CBN window.”

Gwadabe said the significant influx of illegal forex operators from neighbouring countries was further compounding the exchange rate spike problem.

RenCap’s Popoola said liquidity could come to the interbank market if certain steps were taken by the government.

He stated, “Liquidity currently comes from only one source, the CBN. We can also get liquidity into the market through remittances, portfolio investors and foreign direct Investment. How do we do it? The answer is the price level. There is a price level that will drive liquidity into the market.”

However, he added that the forex market was still anticipating what would come out of the maturity of the first future transactions after the introduction of the new flexible forex regime.

“About $700m is due next week; everybody is looking forward to the maturity of the first forward transactions. So, the market appears to be in a wait-and-see mode. So, let us see what happens next week,” Popoola said.

The naira closed at 283.75 against the dollar at the interbank market on Wednesday. The external reserves were $26.3bn on July 12.

“I think the foreign investors are not comfortable with naira at around 280/dollar,” Ezun noted.
Source: punchng.com

Shirley Montag Almon- - A rare female genius in econometrics

Some months back during my master degree at the university of Lagos, i studied the almon approach to the distributed lag model. It was quite interesting and i fell in love with this technique almost immediately. I never knew the propounder was a woman. A beautiful woman she was when i searched for her online. I also discovered she was dead and she died early. She indeed impacted so much in the field of econometrics even with her short time here on earth. This woman have come to be one of my role models. To Shirley, your work on econometrics would

forever live on. Here is a brief profile of her I saw on Wikipedia.

Shirley Montag Almon (1935–1975) was an economist noted for the Almon Lag. She was educated at Goucher College Baltimore and then for her PhD at Harvard (1964). A core element of her PhD was published in Econometrica (1965) and introduced the now famous technique for estimating distributed lags. She went on to work at the Women's Bureau, the National Bureau of Economic Research, The Federal Reserve Bank of San Francisco, the Federal Reserve Board and at both Wesley College and Harvard University. Her most noted post was her appointment to the staff of the President's Council of Economic Advisors in 1966.[1][2]

Almon was born on February 6, 1935 in Saxonburg, Pennsylvania, the oldest of seven children of Harold and Dorothea Montag. She married Clopper Almon Jr. on June 14, 1958. She was diagnosed with a brain tumor in December 1967 after four years of various symptoms, and died on September 29, 1975 in College Park, Maryland.[1][3]

Selected publications Edit

"The distributed lag between capital appropriations and expenditures". Econometrica 33: 178–196. 1965. JSTOR 1911894.
"Lags between investment decisions and their causes". Review of Economics and Statistics 50: 193–206. 1968. JSTOR 1926195.

The Augmented Dickey Fuller Unit root test.

Hello, today I will be explaining the Augmented Dickey Fuller (ADF) unit root test.
The ADF test is a test for unit root in a time series sample. It is an augmented version of the Dickey Fuller test. The ADF test is used to test for data stationarity of a variable. For every time series analysis, it is necessary to ascertain the order of integration of the variable.  This enables one know the appropriate technique needed for analysis.
When all variables are stationary at levels which we call I(0), the OLS technique is most appropriate. When your variables are stationary at first difference I(1), we proceed to a cointegration test. The cointegration test allows us to test if variables in the model have long run relationship. If your variables have at least one cointegrating relationship, you proceed to run an Error Correction Model (ECM). If there are more than one cointegrating relationship, we run a Vector Error Correction Model (VECM), and if no cointegrating relationship, the Vector Autoregressive (VAR) model is said to be the most appropriate.
Back to the topic, since I'm an E-views user, the ADF test would be discussed with the use of the E-views platform. We assume that your work file has already been prepared on E-views.
STEP ONE:
Double click on the variable of your choice to open the data set or series.
STEP TWO:
Click view and scroll down to unit root test. On the unit root interface, you should take note of the Test type which already has the ADF test on it. Clicking on the drop down Icon,there are other unit root test types which would not be discussed now.
On the interface, there is the test for unit root test in; levels I(0), 1st difference 1(1), and 2nd difference I(2). In economic analysis, I(2) variables shouldn't be used.
STEP THREE
Click on level. This is to test if the variables are stationary at levels. You may assume intercept and no trend if you so desire or trend and intercept.
STEP FOUR
Leave the lag length automatic selection as it is.
STEP FIVE
Click OK.
STEP SIX
The ADF Unit root test result interface appears.
There are two ways at which you can interpreted the ADF result.
a) compare the absolute value of the test critical value at 5% level with the t-statistics value. If the t-statistics absolute value is greater than the ADF test statistics, we reject the null hypothesis of the presence of unit root and accept the alternative hypothesis that the variable doesn't have unit root problem and its stationary at levels.
b) we can also use the prob. Value to determine the stationarity of the variable. If the p.value is greater than 0.05, we fail to reject the null hypothesis of the presence of unit root ie. The variable is not stationary. If the p.value is less than 0.05 we reject the null hypothesis and accept the alternate hypothesis and conclude that the variable is stationary.
STEP SEVEN
If the variable isn't stationary at levels, we go back to the same procedure as before. We go to view-unit root test- click on first difference and okay.
And then follow the same procedures as before.

I hope this helps even without pictorial illustrations. Feel free to ask questions and make comment. Thank you.