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Africa > Uganda

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Cover IMF Working Papers
On the First-Round Effects of International Food Price Shocks: the Role of the Asset Market Structure
Mr. Rafael A Portillo
and
Luis-Felipe Zanna
We develop a tractable small open-economy model to study the first-round effects of international food price shocks in developing countries. We define first-round effects as changes in headline inflation that, holding core inflation constant, help implement relative price adjustments. The model features three goods (food, a generic traded good and a non-traded good), varying degrees of tradability of the food basket, and alternative international asset market structures (complete and incomplete markets, and financial autarky). First-round effects depend crucially on the asset market structure and the different transmission mechanisms they trigger. Under complete markets, inter-temporal substitution prevails, making the inflationary impact of international food prices proportional to the food share in consumption, which in developing economies is typically large. Under financial autarky, the income channel is dominant, and first-round effects are instead proportional to the country's food balance—the difference between the country's food endowment and its consumption—which in developing countries is typically small. The latter result holds regardless of the degree of food tradability. Incomplete markets yield a combination of the two extremes. Our results cast some doubt on the view that international food price shocks are inherently inflationary in developing countries.
Keywords:
WP; core inflation; Food Price Shocks; First-Round Effects; Developing Countries; New-Keynesian Models; Asset Market Structure; IM solution; nominal exchange rate; headline inflation; solution nest; inflation dynamics; market clearing condition; nominal price; Inflation; Consumption; Food prices; Securities markets; Commodity price shocks; Sub-Saharan Africa
Cover IMF Working Papers
The Impact of the Regional Cross-Listing of Stocks on Firm Value in Sub-Saharan Africa
Olatundun Janet Adelegan
This paper examines the impact of regional cross-listing on stock prices. The sample consists of sub- Saharan African firms that have cross-listed during the period 1992-2008. Using event study methodology, the study finds positive abnormal returns around the date of the regional cross-listing of stocks. The positive announcement period effect, together with the normal post cross-listing performance, shows that regional cross-listing increases firm value. Overall, this provides evidence that firms benefit from listing outside their home market and need to be taken into consideration by SSA country authorities as they seek a regional approach to stock market development. Thus, policy makers of both the countries of primary listing (home country) and secondary listing (host country) need the right policy handles to conceptualize, facilitate and steer regional cross-listing efforts by firms. Through complementary policy-based efforts, policy makers can set the stage for regional cross-listings and harness the numerous related benefits.
Keywords:
WP; company; stock market; listing