Romain Houssa

Monetary union in West Africa and asymmetric shocks: A dynamic structural factor model approach

We analyse the costs of a monetary union in West Africa by means of asymmetric aggregate demand and aggregate supply shocks. Previous studies have estimated the shocks with the VAR model.We discuss the limits of this approach and apply a new technique based on the dynamic factor model.The results suggest the presence of economic costs for a monetary union in West Africa because aggregate supply shocks are poorly correlated or asymmetric across these countries. Aggregate demand shocks are more positively or less negatively correlated between West African countries. These conclusions imply some policy recommendations for the monetary union project in West Africa.

African trade dynamics: is China a different trading partner?

This paper employs the standard gravity model to identify the quality of governance of Chinas African trade partners. As a benchmark, we perform the same analysis on other major African trade partners: France, Germany, UK, and USA. Data from 53 African countries in 1996–2009 show that only China is consistently willing to import more from African countries with a lower governance standing. By doing so; China fills a gap left open by the other major world economies, and might even play a key role in the future development of Africa.

Identification of Macroeconomic Factors in Large Panels

This paper presents a dynamic factor model in which the extracted factors and shocks are given a clear economic interpretation. The economic interpretation of the factors is obtained by means of a set of over-identifying loading restrictions, while the structural shocks are estimated following standard practices in the SVAR literature. Estimators based on the EM algorithm are developped. We apply this framework to a large panel of US monthly macroeconomic series. In particular, we identify nine macroeconomic factors and discuss the economic impact of monetary policy stocks. The results are theoretically plausible and in line with other findings in the literature.

Explaining African Growth Performance: A Production-Frontier Approach

This paper employs a production frontier approach that allows distinguishing technologic progress from efficiency development. Data on 35 African countries in 1970-2007 show that efficiency losses have constrained growth in Africa while technology progress has played a marginal growth enhancing role in the region. Moreover, physical and human capital accumulation are the main factors that drive productivity growth at the country level. Examining the outcomes of successful countries suggests that good governance, institutional quality and good policies are key factors for improving economic development in Africa. These factors are even more required in Sub-Saharan Africa given the natural constraints of geography in the region.

To fish or not to fish? Resource degradation and income diversification in Benin

This paper looks at the relationship between natural resource degradation and income diversification for fishing communities in southern Benin. We find that the higher the degradation of the fishery stock, the more fishers diversify their income away from the fishery sector. However, given the rapid natural resource degradation, the level of income diversification that we find is surprisingly low and far from sufficient to relieve the stress on the lakes. In explaining the low level of income diversification, our results suggest that education plays a role.