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Africa > Uganda

You are looking at 1 - 9 of 9 items for :

  • Type: Journal Issue x
  • Macroeconomics: Production x
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Cover IMF Working Papers
Long-Run Biological Interest Rate for Pay-As-You-Go Pensions in Advanced and Developing Countries
Mr. Masahiro Nozaki
How much of an internal rate of return would a sustainable pay-as-you-go pension system offer current and future generations equally? The answer is the sum of the Long-Run Biological Interest Rates (LBIR), the real-world equivalent of Samuelson’s (1958) biological interest rate, and future productivity growth. Reflecting global population ageing, the median LBIR across 172 countries is as low as 1 percent per year. The LBIRs are particularly low in advanced countries, estimated to be negative in many of them, and require ample financial reserves today or future productivity growth to maintain participation in pension schemes. On the other hand, the LBIRs in less developed regions, such as in sub-Saharan Africa, are relatively high, indicating a potential to use a pay-as-you-go scheme to expand the coverage of public pensions. Raising the retirement age by five years brings up the LBIR by 40 basis points, significantly improving the long-run budget constraint of a pension scheme.
Keywords:
WP; rate of return; life expectancy; LBIR estimate; Pay-as-you-go pension; internal rate of return; pension reform; contribution rate; LBIR level; RCR decrease; replacement rate; medium-fertility variant; median LBIR; Pensions; Aging; Pension spending; Productivity; Retirement; Sub-Saharan Africa; Middle East; Europe; North Africa; East Africa
Cover IMF Working Papers
Taylor Visits Africa
Carlos Goncalves
Many low-income countries do not use interest rates as their main monetary policy instrument. In East Africa, for instance, targeting money aggregates has been pretty much the rule rather than the exception. Nevertheless, these targets are seldom met and often readjusted according to the economic environment. This opens up the possibility that central banks are de facto pursuing a strategy more akin to a Taylor Rule. Estimations of small-scale models for Kenya, Uganda and Tanzania suggest that these self-styled "monetary targeters" are respecting the Taylor Principle, that is are on average increasing nominal interest rates more than proportionally to inflation. Nevertheless, steep deviations from the Taylor Rule have taken place in Kenya and Tanzania. In Uganda, these errors are much smaller, in fact similar in size to Taylor Rule deviations found for Brazil. More surprisingly, they are smaller than South Africa’s, the continent’s sole long-term inflation targeter.
Keywords:
WP; inflation deviation; interest rate equation; Neutral interest rates; central bank; inflation target; monetary policy tightness; interest rates instrument; deviations from the Taylor Rule; inflation goal; Inflation; Output gap; Interbank rates; Inflation targeting; Africa
Cover IMF Working Papers
The Role of Productivity, Transportation Costs, and Barriers to Intersectoral Mobility in Structural Transformation
Cem Karayalcin
and
Mihaela Pintea
The process of economic development is characterized by substantial reallocations of resources across sectors. In this paper, we construct a multi-sector model in which there are barriers to the movement of labor from low-productivity traditional agriculture to modern sectors. With the barrier in place, we show that improvements in productivity in modern sectors (including agriculture) or reductions in transportation costs may lead to a rise in agricultural employment and through terms-oftrade effects may harm subsistence farmers if the traditional subsistence sector is larger than a critical level. This suggests that policy advice based on the earlier literature needs to be revised. Reducing barriers to mobility (through reductions in the cost of skill acquisition and institutional changes) and improving the productivity of subsistence farmers needs to precede policies designed to increase the productivity of modern sectors or decrease transportation costs.
Keywords:
WP; subsistence farming; terms of trade; Structural transformation; Subsistence agriculture; multi-sector models; Economic development; Transportation costs; transportation cost; agriculture sector; productivity improvement; modern agriculture; productivity difference; excess demand; improvement result; Agricultural sector; Productivity; Transportation; Manufacturing; Sub-Saharan Africa
Cover IMF Working Papers
Identifying Constraints to Financial Inclusion and Their Impact on GDP and Inequality: A Structural Framework for Policy
Ms. Era Dabla-Norris
,
Yan Ji
,
Robert M. Townsend
, and
Ms. Filiz D Unsal
We develop a micro-founded general equilibrium model with heterogeneous agents to identify pertinent constraints to financial inclusion. We evaluate quantitatively the policy impacts of relaxing each of these constraints separately, and in combination, on GDP and inequality. We focus on three dimensions of financial inclusion: access (determined by the size of participation costs), depth (determined by the size of collateral constraints resulting from limited commitment), and intermediation efficiency (determined by the size of interest rate spreads and default possibilities due to costly monitoring). We take the model to a firm-level data from the World Bank Enterprise Survey for six countries at varying degrees of economic development—three low-income countries (Uganda, Kenya, Mozambique), and three emerging market countries (Malaysia, the Philippines, and Egypt). The results suggest that alleviating different financial frictions have a differential impact across countries, with country-specific characteristics playing a central role in determining the linkages and tradeoffs between inclusion, GDP, inequality, and the distribution of gains and losses.
Keywords:
WP; participation cost; Gini coefficient; cost of capital; intermediation cost; Financial inclusion; inequality; income distribution; hetergenous agents; optimal contract; credit regime; lending interest rate; Self-employment; Credit; Income inequality; Collateral
Cover IMF Working Papers
The East African Community: Prospects for Sustained Growth
Ms. Catherine McAuliffe
,
Ms. Sweta Chaman Saxena
, and
Mr. Masafumi Yabara
The East African Community (EAC) has been among the fastest growing regions in sub-Saharan Africa in the past decade or so. Nonetheless, the recent growth path will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade—the ambition of most countries in the region. This paper builds on methodologies established in the growth literature to identify a group of countries that achieved growth accelerations and sustained growth to use as benchmarks to evaluate the prospects, and potential constraints, for EAC countries to translate their recent growth upturn into sustained high growth. We find that EAC countries compare favorably to the group of sustained growth countries—macroeconomic and government stability, favorable business climate, and strong institutions—but important differences remain. EAC countries have a smaller share of exports, lower degree of financial deepening, lower levels of domestic savings, higher reliance on donor aid, and limited physical infrastructure and human capital. Policy choices to address some of these shortcomings could make a difference in whether the EAC follows the path of sustained growth or follows other countries where growth upturns later fizzled out. 
Keywords:
WP; EAC country; EAC member; growth acceleration; EAC economy; EAC growth; Accelerated growth; sustained growth; benchmarking; East African Community; sub-Saharan Africa; EAC integration; exchange rate; private sector; common market; Exports; Financial sector; Government debt management; Productivity; Real exchange rates; Africa; Global
Cover IMF Working Papers
The Dynamic Implications of Debt Relief for Low-Income Countries
Mr. Ales Bulir
,
Alma Romero-Barrutieta
, and
Jose Daniel Rodríguez-Delgado
The effects of debt relief on incentives to accumulate debt, consume, and invest are an important concern for donors and recipients. Using a dynamic stochastic general equilibrium model of a small open economy with a minimum consumption requirement and an endogenous relief probability, we show that excessive debt accumulation is consistent with an anticipation of a future debt relief. Simulations of the calibrated model using 1982-2006 Ugandan data suggest that debt-relief episodes are likely to have only a temporary impact on the level of debt in low-income countries, while being associated with more consumption and less invesment. The long-run debt-to-GDP ratio is estimated to be about twice as high with debt relief than without it.
Keywords:
WP; debt forgiveness; debt-to-GDP ratio; interest rate; Debt relief; general equilibrium model; small open economy; donor debt-relief policy; productivity shock; debt-relief rule; probability value; debt-relief probability; debt-relief lottery; debt-relief shock; debt-relief scenario; policy rule; Consumption; Productivity; Disposable income; Sub-Saharan Africa; debt-relief episode; debt-relief function; IMF Institute
Cover IMF Working Papers
On the Optimal Adherence to Money Targets in a New-Keynesian Framework: An Application to Low-Income Countries
Mr. Andrew Berg
,
Ms. Filiz D Unsal
, and
Mr. Rafael A Portillo
Many low-income countries continue to describe their monetary policy framework in terms of targets on monetary aggregates. This contrasts with most modern discussions of monetary policy, and with most practice. We extend the new-Keynesian model to provide a role for “M” in the conduct of monetary policy, and examine the conditions under which some adherence to money targets is optimal. In the spirit of Poole (1970), this role is based on the incompleteness of information available to the central bank, a pervasive issues in these countries. Ex-ante announcements/forecasts for money growth are consistent with a Taylor rule for the relevant short-term interest rate. Ex-post, the policy maker must choose his relative adherence to interest rate and money growth targets. Drawing on the method in Svensson and Woodford (2004), we show that the optimal adherence to ex-ante targets is equivalent to a signal extraction problem where the central bank uses the money market information to update its estimate of the state of the economy. We estimate the model, using Bayesian methods, for Tanzania, Uganda (both de jure money targeters), and Ghana (a de jure inflation targeter), and compare the de facto adherence to targets with the optimal use of money market information in each country.
Keywords:
WP; interest rate
Cover IMF Working Papers
Sources of Inflation in Sub-Saharan Africa
Mr. Shanaka J Peiris
and
Régis Barnichon
This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real money demand function to recover the structural output and money gaps for seventeen African countries. The central finding is that both gaps contain significant information regarding the evolution of inflation, albeit with a larger role played by the money gap. There is no significant evidence of asymmetry in the relationship.
Keywords:
WP; money gap; excess demand; Inflation; Phillips curve; Money Demand; Panel Cointegration; Growth Accounting; panel money demand estimation; money demand function; Phillips Curve Panel GMM; inflation movement; output gap measure; Output gap; Demand for money; Potential output; Estimation techniques; Sub-Saharan Africa; integration estimation technique; Cointegration regression
Cover IMF Staff Country Reports
Uganda: Selected Issues and Statistical Appendix
International Monetary Fund
This Selected Issues paper analyzes the underlying sources of growth in Uganda, suggesting that the contribution to growth from total factor productivity has been minor, while the high population growth poses a significant challenge to sustain a rapid improvement in living standards. The paper takes a closer look at the monetary transmission mechanisms in Uganda, aimed at assessing the appropriate choice of intermediate target and mix of liquidity sterilization instruments. It also focuses on the recent financial sector reforms undertaken by the government.
Keywords:
ISCR; CR; Uganda; bank; TFP growth; high-productivity sector; exchange rate appreciation; sterilization operations; technical efficiency; financing cost; asset quality; capital base; risk portfolio; lending market; term financing; interest rate spread; low-productivity sector; price objective; growth prospect; forecast inflation; Total factor productivity; Inflation; Productivity; Commercial banks; Production growth; Sub-Saharan Africa