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Financial Instability, Trade Openness and Energy Prices on Leading African Countries Sustainable Growth

Abstract. This study aimed to examine the effect of financial instability, energy prices and trade openness on economic growth for leading African countries (Egypt, Kenya, Morocco, Nigeria and South Africa). We employed the second-generation cointegration test and the Dumitrescu and Hurlin (DH) heterogeneous panel Granger causality test over the period from 1970 to 2016. The result of cointegration analysis revealed that, there is the existence of a cointegration relationship between the financial instability, oil prices, and trade openness on economic growth sustainability for leading African countries. While, the causality test has revealed a unidirectional causal relationship, which running from financial instability to real economic growth, oil price to real economic growth; and a bidirectional causality running between trade openness and economic growth. The empirical results also showed that, the intervention by leading African country's policymakers could create rigidity or financial repression policies rather than a more stable financial system which could achieve by financial rules and regulations being designed to widen the space for the growth and stability of oriented macroeconomic policies.


Keywords: energy prices, financial instability, growth, trade openness.


JEL Classification: C01, F43


Ahmad, A. U.; Loganathan, N.; Ismail, S.; Mardani, A.; Streimikiene, D.; Golam Hassan, A. A. 2018. Financial Instability, Trade Openness and Energy Prices on Leading African Countries Sustainable Growth, In Economic Computation and Economic Cybernetics Studies and Research, online ISSN 1842–3264, print ISSN 0424–267X p. 127–142 [Science Citation Index Expanded; Social Sciences Citation Index®; Social Scisearch®; Journal Citation Reports/Social Sciences Edition].


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