Home ARTICLES Review of Macroeconomic Dynamics in the Democratic Republic of Congo (II): Accounting for the Business Cycle

Review of Macroeconomic Dynamics in the Democratic Republic of Congo (II): Accounting for the Business Cycle

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What are the major sources of economic fluctuations in the Democratic Republic of Congo (DRC) between 1960 and 2017? To address this issue, we use a canonical dynamic stochastic general equilibrium (DSGE) model and apply the business cycle accounting. Using a plain-vanilla framework with four types of frictions namely efficiency wedge, investment wedge, government consumption wedge, and labor wedge, our results suggest that efficiency wedge and government wedge account for nearly 78% of economic fluctuations in the DRC. Wedges are quite persistent, except for the investment which is quite weak. We also find that the government wedge is the most volatile, and only the efficiency wedge is procyclical. Furthermore, detrending methods (HP or first difference filters) do not affect our results. However, when considering subperiods, results are not time invariant

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François Kabuya Kalala, Jean-Baptiste Ntagoma et Jean-
Paul K. Tsasa

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