Financial Integration and Consumption Smoothing in Nigeria and Egypt: Do Global Uncertainties Matter?
In this study, we adopt the structural vector auto-regressive (SVAR) model to assess the degree to which global uncertainties affect the relationship between financial integration and consumption smoothing in Egypt and Nigeria using quarterly data from 2010 to 2020. The study hypothesises that g...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Institute of International Politics and Economics, Belgrade
2024-04-01
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| Series: | Međunarodna politika |
| Subjects: | |
| Online Access: | https://medjunarodnapolitika.rs/wp-content/uploads/MO/2024/1190/MO-2024-1190-article-1.pdf |
| Summary: | In this study, we adopt the structural vector auto-regressive (SVAR) model
to assess the degree to which global uncertainties affect the relationship
between financial integration and consumption smoothing in Egypt and
Nigeria using quarterly data from 2010 to 2020. The study hypothesises that
global uncertainty shocks will have adverse effects on consumption
smoothing in both Nigeria and Egypt. Our main results from the study
show that the economic policy uncertainty shock has a more declining effect
on consumption smoothing in Egypt than other global uncertainty proxies.
On the other hand, global economic condition shocks have a more declining
effect on consumption smoothing in Nigeria than other global uncertainty
proxies. In addition, financial integration accounted for more variability in
consumption smoothing in Egypt than in Nigeria; this may be due to the
fact that Egypt is more financially integrated than Nigeria. We therefore
make the following recommendations: Nigeria may diversify the economy
by promoting growth in other sectors, such as manufacturing, to reduce the
impact of external shocks on the economy and provide greater stability for
households. Policymakers in Egypt can diversify export markets and reduce
reliance on the US market to mitigate the impact of US policy fluctuations
on Egypt’s economy. |
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| ISSN: | 0543-3657 2787-0618 |