The aim of this paper is to examine the behaviour of GDP growth in various African countries allowing for possible non-linearities that are particularly relevant in their case since they have been affected by various conflicts. Specifically, first we carry out standard unit root tests and then follow an approach that combines fractional integration and non-linearities (modelled using Chebyshev polynomials) in a single framework. The results for a sample of 28 countries confirm the existence of non-linearities in most cases, the only exceptions being the Central African Republic, Niger, Sierra Leone and Somalia. Further, there is heterogeneity across countries in terms of the degree of persistence, the GDP series being characterised in different cases by mean reversion, unit root behaviour, and orders of integration significantly higher than 1 respectively. The policy implications of the empirical analysis are also discussed, namely whether or not activist policies are required.
African Growth, Non-Linearities and Strong Dependence: An Empirical Study
KeywordsGDP growth, African countries, non-linearities, fractional integration, Chebyshev polynomials