Financial integration and macroeconomic volatility in Zimbabwe
Purpose – Many developing countries are pursuing policies that foster international financial integration after decades of financial repression. Greater access to foreign financial markets may have both positive and negative impact on the performance of the economy. One of the concerns of internatio...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2020-04-01
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| Series: | Journal of Economics and Development |
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| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JED-11-2019-0063/full/pdf?title=financial-integration-and-macroeconomic-volatility-in-zimbabwe |
| _version_ | 1811261571091922944 |
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| author | Richard Makoto |
| author_facet | Richard Makoto |
| author_sort | Richard Makoto |
| collection | DOAJ |
| description | Purpose – Many developing countries are pursuing policies that foster international financial integration after decades of financial repression. Greater access to foreign financial markets may have both positive and negative impact on the performance of the economy. One of the concerns of international financial integration is macroeconomic volatility which may affect both monetary and real sectors. Zimbabwe has chosen to pursue a financial liberalization strategy in the form of imperfect financial integration following periods of excessive domestic shocks. An upsurge of capital flows since the epic of economic crisis in the 2000s has been observed with varying macroeconomic impacts. This study empirically examines the impact of partial international financial integration on the volatility of macroeconomic variables. Design/methodology/approach – The study utilized an ARDL Model suggested by Pesaran et al., (2003) which is appropriate for short time periods. Findings – The results show that financial integration has a negative effect on output volatility while insignificant on consumption volatility. Practical implications – The study recommends that the country should gradually liberalize the capital account and properly sequence financial development reforms in order to minimize losses from global financial integration. Originality/value – The study used time series for Zimbabwe during a period of external imbalance, repeated economic cycles, sudden stops in capital flows and limited scope of imperfect financial integration. Findings in such an economy will be a referral for policymakers in other economies that would want to pursue international financial integration. |
| first_indexed | 2024-04-12T19:08:18Z |
| format | Article |
| id | doaj.art-a7902186e9fd440eae2431a42c43b290 |
| institution | Directory Open Access Journal |
| issn | 1859-0020 2632-5330 |
| language | English |
| last_indexed | 2024-04-12T19:08:18Z |
| publishDate | 2020-04-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Economics and Development |
| spelling | doaj.art-a7902186e9fd440eae2431a42c43b2902022-12-22T03:19:59ZengEmerald PublishingJournal of Economics and Development1859-00202632-53302020-04-0122222924810.1108/JED-11-2019-0063643324Financial integration and macroeconomic volatility in ZimbabweRichard Makoto0Department of Economics, University of Zimbabwe, Harare, ZimbabwePurpose – Many developing countries are pursuing policies that foster international financial integration after decades of financial repression. Greater access to foreign financial markets may have both positive and negative impact on the performance of the economy. One of the concerns of international financial integration is macroeconomic volatility which may affect both monetary and real sectors. Zimbabwe has chosen to pursue a financial liberalization strategy in the form of imperfect financial integration following periods of excessive domestic shocks. An upsurge of capital flows since the epic of economic crisis in the 2000s has been observed with varying macroeconomic impacts. This study empirically examines the impact of partial international financial integration on the volatility of macroeconomic variables. Design/methodology/approach – The study utilized an ARDL Model suggested by Pesaran et al., (2003) which is appropriate for short time periods. Findings – The results show that financial integration has a negative effect on output volatility while insignificant on consumption volatility. Practical implications – The study recommends that the country should gradually liberalize the capital account and properly sequence financial development reforms in order to minimize losses from global financial integration. Originality/value – The study used time series for Zimbabwe during a period of external imbalance, repeated economic cycles, sudden stops in capital flows and limited scope of imperfect financial integration. Findings in such an economy will be a referral for policymakers in other economies that would want to pursue international financial integration.https://www.emerald.com/insight/content/doi/10.1108/JED-11-2019-0063/full/pdf?title=financial-integration-and-macroeconomic-volatility-in-zimbabwefinancial integrationconsumption volatilitygdp volatility |
| spellingShingle | Richard Makoto Financial integration and macroeconomic volatility in Zimbabwe Journal of Economics and Development financial integration consumption volatility gdp volatility |
| title | Financial integration and macroeconomic volatility in Zimbabwe |
| title_full | Financial integration and macroeconomic volatility in Zimbabwe |
| title_fullStr | Financial integration and macroeconomic volatility in Zimbabwe |
| title_full_unstemmed | Financial integration and macroeconomic volatility in Zimbabwe |
| title_short | Financial integration and macroeconomic volatility in Zimbabwe |
| title_sort | financial integration and macroeconomic volatility in zimbabwe |
| topic | financial integration consumption volatility gdp volatility |
| url | https://www.emerald.com/insight/content/doi/10.1108/JED-11-2019-0063/full/pdf?title=financial-integration-and-macroeconomic-volatility-in-zimbabwe |
| work_keys_str_mv | AT richardmakoto financialintegrationandmacroeconomicvolatilityinzimbabwe |