A Effects of exogenous shocks on Africa's participation in world trade: empirical evidence from the Franc zone.
DOI:
https://doi.org/10.35877/454RI.qems4178Keywords:
exogenous shocks, international trade, ACP, PVARAbstract
This study examines the influence of external disturbances - such as world energy and oil costs, key interest rates and the money supply of major economic powers (Federal Reserve Bank (FED), People's Bank of China) on the engagement of French-speaking countries in world trade. We developed a composite index of external shocks using principal component analysis (PCA), with the aim of reflecting the shared dynamics of these variables. A Panel VAR (PVAR) model was estimated based on quarterly data from 2000 to 2018. The data show that these disruptions have a significant and time-varying impact on franc zone trade, underlining strong external dependence. The study recommends a better alignment of economic policies, dynamic cyclical surveillance and a policy of diversifying trading partners in order to consolidate the resilience of Franc zone economies to international disruptions.
References
Abrigo, M. R. M., & Love, I. (2016). Estimation of panel vector autoregression in Stata: a package of programs. Stata Journal, 16(3), 778–804.
Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Crown Business.
Ahmed, S., Appendino, M., & Ruta, M. (2017). Global value chains and the exchange rate elasticity of exports. The B.E. Journal of Macroeconomics, 17(1).
Aizenman, J., Jinjarak, Y., & Spiegel, M. M. (2021). Supply chain trade and the COVID-19 pandemic: A temporal network analysis. IMF Economic Review, 69(3), 522–561.
Amour, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. Quarterly Review of Economics and Finance, 46(2), 190–210.
Auerbach, A. J., & Gorodnichenko, Y. (2012). Measuring the output responses to fiscal policy. American Economic Journal: Economic Policy, 4(2), 1–27.
Baccini, L. (2021). Trade agreement design and the structure of international trade. International Studies Quarterly, 65(3), 783–794.
Baffes, J., Kabundi, A., & Nagle, P. (2022). Commodity price shocks and trade balances in developing economies. World Bank Policy Research Working Paper No. 10034.
Baffes, J., Kose, M. A., Ohnsorge, F., & Stocker, M. (2022). Commodity Markets Outlook. World Bank Group.
Balassa, B. (1964). The purchasing-power parity doctrine: A reappraisal. Journal of Political Economy, 72(6), 584–596.
Baldwin, R. (2016). The Great Convergence: Information Technology and the New Globalization. Harvard University Press.
Baldwin, R. (2022). The Globotics Upheaval: Globalization, Robotics, and the Future of Work. Oxford University Press.
Banque mondiale. (2022). Perspectives économiques mondiales. Washington, DC: Banque mondiale.
Barro, R. J. (1995). Inflation and economic growth. Bank of England Quarterly Bulletin, 35(2), 166–176.
Blanchard, O., Cerutti, E., & Summers, L. H. (2016). Inflation and activity – Two explorations and their monetary policy implications. IMF Working Paper No. 16/230.
Bloom, N. (2009). The impact of uncertainty shocks. Econometrica, 77(3), 623–685.
Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 115–135.
Bruno, V., & Shin, H. S. (2015). Capital flows and the risk-taking channel of monetary policy. Journal of Monetary Economics, 71, 119–132.
Caldara, D., & Herbst, E. (2019). Monetary policy, real activity, and credit spreads: Evidence from Bayesian structural VARs. American Economic Journal: Macroeconomics, 11(1), 157–192.
Caldara, D., & Herbst, E. (2019). Monetary policy, real activity, and credit spreads: Evidence from Bayesian VARs. American Economic Journal: Macroeconomics, 11(1), 157–192.
Calderón, C., & Schmidt-Hebbel, K. (2007). What drives long-run economic growth? A look at the global evidence. Central Bank of Chile Working Paper No. 417.
Calderón, C., Chong, A., & Loayza, N. (2007). Institutional quality and income distribution. Economics & Politics, 19(1), 1–34.
Canova, F., & Ciccarelli, M. (2013). Panel vector autoregressive models: A survey. ECB Working Paper Series, No. 1507.
Carrère, C., & De Melo, J. (2015). Non-tariff measures: What do we know, what should be done? Journal of Economic Integration, 30(1), 169–206.
CNUCED. (2023). Rapport sur le commerce et le développement. Genève: CNUCED.
Corsetti, G., Meier, A., & Müller, G. J. (2013). Fiscal stimulus with spending reversals. Review of Economics and Statistics, 94(4), 878–895.
Coulibaly, B., & Gandhi, D. (2021). Africa’s untapped potential in global value chains. Brookings Africa Growth Initiative.
Deaton, A., & Miller, R. I. (1996). International commodity prices, macroeconomic performance and politics in Sub-Saharan Africa. Journal of African Economies, 5(3), 99–191.
Devereux, M. B., & Engel, C. (2003). Monetary policy in the open economy revisited: Price setting and exchange-rate flexibility. Review of Economic Studies, 70(4), 765–783.
Di Giovanni, J., & Levchenko, A. A. (2009). Trade openness and volatility. The Review of Economics and Statistics, 91(3), 558–585.
Diop, M., Fofana, I., & Konate, A. (2023). Chocs extérieurs et résilience commerciale des pays africains. Revue Africaine de l’Économie Internationale, 14(2), 33–57.
Direction des Statistiques du Commerce International. (2022). Statistiques du commerce extérieur.
Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114(493), F22–F49.
Dornbusch, R. (1976). Expectations and exchange rate dynamics. Journal of Political Economy, 84(6), 1161–1176.
Dornbusch, R. (1980). Open Economy Macroeconomics. Basic Books.
Driscoll, J. C., & Kraay, A. C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics, 80(4), 549–560.
ECA. (2021). Economic Report on Africa 2021. Addis-Abeba: Commission économique pour l’Afrique.
Edwards, S. (1988). Openness, productivity and growth: What do we really know? Economic Journal, 108(447), 383–398.
Edwards, S. (1988). Real and monetary determinants of real exchange rate behavior: Theory and evidence from developing countries. Journal of Development Economics, 29(3), 311–341.
FMI. (2022). World Economic Outlook: War Sets Back the Global Recovery. Washington, DC: Fonds monétaire international.
FMI. (2023). Global Economic Prospects. Washington, DC: Fonds monétaire international.
Frankel, J. A., & Romer, D. (1999). Does trade cause growth? American Economic Review, 89(3), 379–399.
Frankel, J. A., & Rose, A. K. (2002). An estimate of the effect of common currencies on trade and income. Quarterly Journal of Economics, 117(2), 437–466.
Gertler, M., & Karadi, P. (2015). Monetary policy surprises, credit costs, and economic activity. American Economic Journal: Macroeconomics, 7(1), 44–76.
Gopinath, G. (2020). International trade and the COVID-19 pandemic. IMF Blog.
Gorodnichenko, Y. (2012). Global shocks, monetary policy, and exchange rates. NBER Working Paper No. 17944.
Gorodnichenko, Y. (2012). Globalization and innovation in emerging markets. American Economic Journal: Macroeconomics, 4(3), 194–200.
Gourdon, J., & de Vries, G. (2022). Regional integration and GVC participation in Africa. World Bank Policy Research Working Paper.
Guillaumont, P. (2019). Zone franc et stabilité macroéconomique : entre protection et dépendance. Revue d’économie du développement, 27(1), 5–24.
Habib, M. M., Milesi-Ferretti, G. M., & Tressel, T. (2021). The financial impact of trade wars. IMF Economic Review, 69(1), 47–94.
Habib, M. M., Mileva, E., & Stracca, L. (2021). The real exchange rate and economic growth: Revisiting the case using external instruments. Journal of International Money and Finance, 110, 102278.
Habib, M. M., Mileva, E., Stracca, L., & Venditti, F. (2021). Global financial cycles and spillovers: A structural factor approach. Journal of International Economics, 132, 103449.
Hamilton, J. D. (2003). What is an oil shock? Journal of Econometrics, 113(2), 363–398.
Heckscher, E. F., & Ohlin, B. G. (1933). Interregional and International Trade. Harvard University Press.
Holtz-Eakin, D., Newey, W., & Rosen, H. S. (1988). Estimating vector autoregressions with panel data. Econometrica, 56(6), 1371–1395.
Kilian, L. (2009). Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market. American Economic Review, 99(3), 1053–1069.
Kose, M. A., & Terrones, M. E. (2015). Collapse and revival: Understanding global recessions and recoveries. IMF Working Paper No. 15/183.
Kose, M. A., Sugawara, N., & Terrones, M. E. (2020). Global Recessions. World Bank Group.
Lane, P. R., & Milesi-Ferretti, G. M. (2018). The external wealth of nations revisited: International financial integration in the aftermath of the global financial crisis. IMF Economic Review, 66(1), 189–222.
Love, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. Quarterly Review of Economics and Finance, 46(2), 190–210.
Markusen, J. R., & Venables, A. J. (1999). Foreign direct investment as a catalyst for industrial development. European Economic Review, 43(2), 335–356.
Miranda-Agrippino, S., & Ricco, G. (2021). The transmission of monetary policy shocks. American Economic Journal: Macroeconomics, 13(3), 74–107.Ngouana, C. L. (2020). Exchange rate volatility and global value chain participation in Sub-Saharan Africa. IMF Working Paper No. 20/19.
Ngouana, C. L. (2020). External shocks and the CFA franc zone: Does the fixed peg make a difference? IMF Working Paper WP/20/55.
Obstfeld, M., & Rogoff, K. (1995). Exchange rate dynamics redux. Journal of Political Economy, 103(3), 624–660.
Obstfeld, M., & Rogoff, K. (2001). The Six Major Puzzles in International Macroeconomics: Is There a Common Cause? NBER Macroeconomics Annual, 15, 339–390.
OCDE. (2023). Perspectives économiques de l’OCDE. Paris: Organisation de coopération et de développement économiques.
OMC. (2023). Rapport sur le commerce mondial 2023. Genève: Organisation mondiale du commerce.
Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265–312.
Pesaran, M. H. (2015). Testing weak cross-sectional dependence in large panels. Econometric Reviews, 34(6-10), 1089–1117.
Ramey, V. A. (2011). Can government purchases stimulate the economy? Journal of Economic Literature, 49(3), 673–685.
Ramey, V. A. (2011). Identifying government spending shocks: It's all in the timing. The Quarterly Journal of Economics, 126(1), 1–50.
Rey, H. (2015). Dilemma not trilemma: The global financial cycle and monetary policy independence. NBER Working Paper No. 21162.
Ricardo, D. (1817). On the Principles of Political Economy and Taxation. John Murray.
Rodrik, D. (2008). The real exchange rate and economic growth. Brookings Papers on Economic Activity, 2008(2), 365–412.
Rodrik, D. (2011). The Globalization Paradox: Democracy and the Future of the World Economy. W. W. Norton & Company.Romer, C. D., & Romer, D. H. (2010). The macroeconomic effects of tax changes: Estimates based on a new measure of fiscal shocks. American Economic Review, 100(3), 763–801.
Stock, J. H., & Watson, M. W. (2002). Forecasting using principal components from a large number of predictors. Journal of the American Statistical Association, 97(460), 1167–1179.
UNCTAD. (2020). World Investment Report 2020. Genève: UNCTAD.
Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Crown Business.
Ahmed, S., Appendino, M., & Ruta, M. (2017). Global value chains and the exchange rate elasticity of exports. The B.E. Journal of Macroeconomics, 17(1).
Aizenman, J., Jinjarak, Y., & Spiegel, M. M. (2021). Supply chain trade and the COVID-19 pandemic: A temporal network analysis. IMF Economic Review, 69(3), 522–561.
Amour, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. Quarterly Review of Economics and Finance, 46(2), 190–210.
Auerbach, A. J., & Gorodnichenko, Y. (2012). Measuring the output responses to fiscal policy. American Economic Journal: Economic Policy, 4(2), 1–27.
Baccini, L. (2021). Trade agreement design and the structure of international trade. International Studies Quarterly, 65(3), 783–794.
Baffes, J., Kabundi, A., & Nagle, P. (2022). Commodity price shocks and trade balances in developing economies. World Bank Policy Research Working Paper No. 10034.
Baffes, J., Kose, M. A., Ohnsorge, F., & Stocker, M. (2022). Commodity Markets Outlook. World Bank Group.
Balassa, B. (1964). The purchasing-power parity doctrine: A reappraisal. Journal of Political Economy, 72(6), 584–596.
Baldwin, R. (2016). The Great Convergence: Information Technology and the New Globalization. Harvard University Press.
Baldwin, R. (2022). The Globotics Upheaval: Globalization, Robotics, and the Future of Work. Oxford University Press.
Banque mondiale. (2022). Perspectives économiques mondiales. Washington, DC: Banque mondiale.
Barro, R. J. (1995). Inflation and economic growth. Bank of England Quarterly Bulletin, 35(2), 166–176.
Blanchard, O., Cerutti, E., & Summers, L. H. (2016). Inflation and activity – Two explorations and their monetary policy implications. IMF Working Paper No. 16/230.
Bloom, N. (2009). The impact of uncertainty shocks. Econometrica, 77(3), 623–685.
Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 115–135.
Bruno, V., & Shin, H. S. (2015). Capital flows and the risk-taking channel of monetary policy. Journal of Monetary Economics, 71, 119–132.
Caldara, D., & Herbst, E. (2019). Monetary policy, real activity, and credit spreads: Evidence from Bayesian structural VARs. American Economic Journal: Macroeconomics, 11(1), 157–192.
Caldara, D., & Herbst, E. (2019). Monetary policy, real activity, and credit spreads: Evidence from Bayesian VARs. American Economic Journal: Macroeconomics, 11(1), 157–192.
Calderón, C., & Schmidt-Hebbel, K. (2007). What drives long-run economic growth? A look at the global evidence. Central Bank of Chile Working Paper No. 417.
Calderón, C., Chong, A., & Loayza, N. (2007). Institutional quality and income distribution. Economics & Politics, 19(1), 1–34.
Canova, F., & Ciccarelli, M. (2013). Panel vector autoregressive models: A survey. ECB Working Paper Series, No. 1507.
Carrère, C., & De Melo, J. (2015). Non-tariff measures: What do we know, what should be done? Journal of Economic Integration, 30(1), 169–206.
CNUCED. (2023). Rapport sur le commerce et le développement. Genève: CNUCED.
Corsetti, G., Meier, A., & Müller, G. J. (2013). Fiscal stimulus with spending reversals. Review of Economics and Statistics, 94(4), 878–895.
Coulibaly, B., & Gandhi, D. (2021). Africa’s untapped potential in global value chains. Brookings Africa Growth Initiative.
Deaton, A., & Miller, R. I. (1996). International commodity prices, macroeconomic performance and politics in Sub-Saharan Africa. Journal of African Economies, 5(3), 99–191.
Devereux, M. B., & Engel, C. (2003). Monetary policy in the open economy revisited: Price setting and exchange-rate flexibility. Review of Economic Studies, 70(4), 765–783.
Di Giovanni, J., & Levchenko, A. A. (2009). Trade openness and volatility. The Review of Economics and Statistics, 91(3), 558–585.
Diop, M., Fofana, I., & Konate, A. (2023). Chocs extérieurs et résilience commerciale des pays africains. Revue Africaine de l’Économie Internationale, 14(2), 33–57.
Direction des Statistiques du Commerce International. (2022). Statistiques du commerce extérieur.
Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. The Economic Journal, 114(493), F22–F49.
Dornbusch, R. (1976). Expectations and exchange rate dynamics. Journal of Political Economy, 84(6), 1161–1176.
Dornbusch, R. (1980). Open Economy Macroeconomics. Basic Books.
Driscoll, J. C., & Kraay, A. C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics, 80(4), 549–560.
ECA. (2021). Economic Report on Africa 2021. Addis-Abeba: Commission économique pour l’Afrique.
Edwards, S. (1988). Openness, productivity and growth: What do we really know? Economic Journal, 108(447), 383–398.
Edwards, S. (1988). Real and monetary determinants of real exchange rate behavior: Theory and evidence from developing countries. Journal of Development Economics, 29(3), 311–341.
FMI. (2022). World Economic Outlook: War Sets Back the Global Recovery. Washington, DC: Fonds monétaire international.
FMI. (2023). Global Economic Prospects. Washington, DC: Fonds monétaire international.
Frankel, J. A., & Romer, D. (1999). Does trade cause growth? American Economic Review, 89(3), 379–399.
Frankel, J. A., & Rose, A. K. (2002). An estimate of the effect of common currencies on trade and income. Quarterly Journal of Economics, 117(2), 437–466.
Gertler, M., & Karadi, P. (2015). Monetary policy surprises, credit costs, and economic activity. American Economic Journal: Macroeconomics, 7(1), 44–76.
Gopinath, G. (2020). International trade and the COVID-19 pandemic. IMF Blog.
Gorodnichenko, Y. (2012). Global shocks, monetary policy, and exchange rates. NBER Working Paper No. 17944.
Gorodnichenko, Y. (2012). Globalization and innovation in emerging markets. American Economic Journal: Macroeconomics, 4(3), 194–200.
Gourdon, J., & de Vries, G. (2022). Regional integration and GVC participation in Africa. World Bank Policy Research Working Paper.
Guillaumont, P. (2019). Zone franc et stabilité macroéconomique : entre protection et dépendance. Revue d’économie du développement, 27(1), 5–24.
Habib, M. M., Milesi-Ferretti, G. M., & Tressel, T. (2021). The financial impact of trade wars. IMF Economic Review, 69(1), 47–94.
Habib, M. M., Mileva, E., & Stracca, L. (2021). The real exchange rate and economic growth: Revisiting the case using external instruments. Journal of International Money and Finance, 110, 102278.
Habib, M. M., Mileva, E., Stracca, L., & Venditti, F. (2021). Global financial cycles and spillovers: A structural factor approach. Journal of International Economics, 132, 103449.
Hamilton, J. D. (2003). What is an oil shock? Journal of Econometrics, 113(2), 363–398.
Heckscher, E. F., & Ohlin, B. G. (1933). Interregional and International Trade. Harvard University Press.
Holtz-Eakin, D., Newey, W., & Rosen, H. S. (1988). Estimating vector autoregressions with panel data. Econometrica, 56(6), 1371–1395.
Kilian, L. (2009). Not all oil price shocks are alike: Disentangling demand and supply shocks in the crude oil market. American Economic Review, 99(3), 1053–1069.
Kose, M. A., & Terrones, M. E. (2015). Collapse and revival: Understanding global recessions and recoveries. IMF Working Paper No. 15/183.
Kose, M. A., Sugawara, N., & Terrones, M. E. (2020). Global Recessions. World Bank Group.
Lane, P. R., & Milesi-Ferretti, G. M. (2018). The external wealth of nations revisited: International financial integration in the aftermath of the global financial crisis. IMF Economic Review, 66(1), 189–222.
Love, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. Quarterly Review of Economics and Finance, 46(2), 190–210.
Markusen, J. R., & Venables, A. J. (1999). Foreign direct investment as a catalyst for industrial development. European Economic Review, 43(2), 335–356.
Miranda-Agrippino, S., & Ricco, G. (2021). The transmission of monetary policy shocks. American Economic Journal: Macroeconomics, 13(3), 74–107.Ngouana, C. L. (2020). Exchange rate volatility and global value chain participation in Sub-Saharan Africa. IMF Working Paper No. 20/19.
Ngouana, C. L. (2020). External shocks and the CFA franc zone: Does the fixed peg make a difference? IMF Working Paper WP/20/55.
Obstfeld, M., & Rogoff, K. (1995). Exchange rate dynamics redux. Journal of Political Economy, 103(3), 624–660.
Obstfeld, M., & Rogoff, K. (2001). The Six Major Puzzles in International Macroeconomics: Is There a Common Cause? NBER Macroeconomics Annual, 15, 339–390.
OCDE. (2023). Perspectives économiques de l’OCDE. Paris: Organisation de coopération et de développement économiques.
OMC. (2023). Rapport sur le commerce mondial 2023. Genève: Organisation mondiale du commerce.
Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265–312.
Pesaran, M. H. (2015). Testing weak cross-sectional dependence in large panels. Econometric Reviews, 34(6-10), 1089–1117.
Ramey, V. A. (2011). Can government purchases stimulate the economy? Journal of Economic Literature, 49(3), 673–685.
Ramey, V. A. (2011). Identifying government spending shocks: It's all in the timing. The Quarterly Journal of Economics, 126(1), 1–50.
Rey, H. (2015). Dilemma not trilemma: The global financial cycle and monetary policy independence. NBER Working Paper No. 21162.
Ricardo, D. (1817). On the Principles of Political Economy and Taxation. John Murray.
Rodrik, D. (2008). The real exchange rate and economic growth. Brookings Papers on Economic Activity, 2008(2), 365–412.
Rodrik, D. (2011). The Globalization Paradox: Democracy and the Future of the World Economy. W. W. Norton & Company.Romer, C. D., & Romer, D. H. (2010). The macroeconomic effects of tax changes: Estimates based on a new measure of fiscal shocks. American Economic Review, 100(3), 763–801.
Stock, J. H., & Watson, M. W. (2002). Forecasting using principal components from a large number of predictors. Journal of the American Statistical Association, 97(460), 1167–1179.
UNCTAD. (2020). World Investment Report 2020. Genève: UNCTAD.
Published
2025-11-13
How to Cite
nitedem kenney, prudence nicaise, & ONGO NKOA, B. E. (2025). A Effects of exogenous shocks on Africa’s participation in world trade: empirical evidence from the Franc zone. Quantitative Economics and Management Studies, 6(6). https://doi.org/10.35877/454RI.qems4178
Issue
Section
Articles
