Mulatu F. Zerihun

Determinants of agroforestry technology adoption in Eastern Cape Province, South Africa

This study explores factors that affect the adoption of agroforestry (AF) technologies in ‘Tsolo’ and ‘Lusikisiki’ areas in O.R. Tambo district in the Eastern Cape Province of South Africa. It is based on empirical evidence gathered from households in the study areas. The aim and objective of the study are consistent with the strategic priorities of the South African Department of Agriculture, Forestry, and Fisheries. The study finds that agricultural farming experience, education level of the household head, a proxy variable for household wealth status, land size owned, number of livestock owned, pace of adoption of other agricultural technologies, the scale of slope of farm land, and percent of severely degraded farm land affect the adoption of AF technologies in the study areas significantly and with the higher magnitudes of the odds ratios. These variables need to be considered in all the initiatives by government and non-governmental organizations to promote AF as a strategy to realize integrated rural development in the study areas. These findings have policy implications to advance integrated sustainable rural development strategies. The local government in the study areas can use the promotion of AF technologies for multiple purposes, particularly as a tool toward rural poverty alleviation and climate change mitigation measures.

Exchange rate misalignment and economic growth : evidence from nonlinear panel cointegration and Granger causality tests

Abstract We analyse the impact of exchange rate misalignment on economic growth for a sample of emerging economies from 1970 to 2014 using a panel smooth transition regression vector error correction model. Besides, we provide a granger causality test conducted in a non-linear framework. We find that a rise in misalignment increases significantly the output in the short-run when currencies are close to equilibrium. When they are highly misaligned, the impact on growth is reduced. However, no significant impact of output on misalignment was found in the short-run. We provide evidence that misalignment granger causes the output at any given level of misalignment both in the short and long-run. Weaker granger causality was found between output and misalignment. This raises some important policy implications. Although emerging economies can use undervaluation as a growth strategy, the benefits are smaller when currencies are highly undervalued. There is, therefore, an incentive to keep exchange rates closer to their equilibrium.

Exploring exchange rate based policy coordination in SADC

Purpose This paper explores the possibilities for policy coordination in the Southern African Development Community (SADC) as well as real effective exchange rate (REER) stability as a prerequisite towards sensible monetary integration. The underlying hypothesis goes with the assertion that countries meeting optimum currency area conditions face more stable exchange rates. Design/methodology/approach The quantitative analysis encompasses 12 SADC member states over the period 1995-2012. Correlation matrixes, dynamic pooled mean group (PMG) and mean group (MG) estimators and real effective exchange rate (REER) and real exchange rate (RER) equilibrium and misalignment analysis are carried out to arrive at the conclusions. Findings The study finds that the structural variables used in the PMG model show that there are common fiscal and monetary policy variables that determine REER/RER in the region. However, the exchange rate equilibrium misalignment analysis reveals that SADC economies are characterised by persistent overvaluation at least in the short term. This calls for further sustained policy coordination in the region. Practical implications The findings in this paper have important policy implications for economic stability and for the attempt of policy coordination in SADC region for the proposed monetary integration to proceed. Originality/value This study is the first attempt that relates the exchange rate as a policy coordination instrument among SADC economies.

Exchange rate misalignment and economic growth: On the possible transmission channels for emerging economies

Abstract Despite the large body of work that exists on the impact of exchange rate undervaluation on economic growth, only a mere literature focuses on the potential transmission mechanisms. There are authors who consider the size of the tradable sector as the operative channel through which undervaluation impacts economic growth. This is due to poor contracting environment and market failures that are prominent in the tradable sector as bad institutions “tax” tradables more than non-tradables. We look at this issue in this article for a set of emerging economies using annual data from 1970 to 2014. We find that the size of the tradable sector is indeed the operative channel through which undervaluation impacts growth. We have ruled out that bad institutions “tax” tradables more than non-tradables. Our results, robust to different undervaluation indexes, highlight instead the importance of total factor productivity surge induced by an undervaluation in increasing growth.

Asymmetric Behavior in Nominal and Real Housing Prices: Evidence from Emerging and Advanced Economies

Abstract In this article, we investigate asymmetry in nominal and real housing price series from eleven emerging and twenty advanced economies using the nonparametric Triples test (Randles et al., 1980), which allows identification of different types of asymmetries in economic cycles. We find asymmetry in fewer emerging than advanced economies. In more than half of the latter, nominal prices reach peaks faster than troughs (positive steepness asymmetry), suggesting the presence of downward nominal rigidities. Nominal price asymmetry is found only in slightly over a quarter of the emerging economies. Hence, nominal housing price increases are more likely to be followed by symmetric price falls in emerging than in advanced countries. Regarding real housing prices, peaks are higher than troughs (positive deepness asymmetry) in half of the advanced economies, suggesting the presence of price overshooting during booms, but less undershooting during busts. Weaker evidence of similar asymmetry is found in emergi...