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Revista Internacional de Economía y Ciencias de la Gestión

Volumen 11, Asunto 4 (2022)

Artículo de revisión

The Relative Effectiveness of Fiscal and Monetary Policy on Economic Growth in Cameroon: An Error Correction Model

Sonkey Louis Ntu*, and Charlotte Nanyongo Wonganya

The aim of this research was to investigate the effectiveness of monetary and fiscal policy on economic growth in Cameroon. The Study make use of Error correction model and Johanson Cointegration using the St. Louis equation to examine the short run and long run effect of these policies on GDP in Cameroon. Data were collected from World Bank Development indicators from 1985 to 2018. Our findings reveal that fiscal policy has a positive and significant effect on economic growth in the short run while monetary policy has a positive and insignificant effect on economic growth in Cameroon in the short run. The result of cointegration using trace statistics shown a single cointegrating equation, meaning that there is a long run relationship. The error correction term estimation gave a negative and significant value of about 0.14 showing that about 14% of error deviation in the short run is corrected in the long run. The overall findings reveal that fiscal policy, monetary policy, and export has asymmetric effect on current GDP with fiscal policy having a greater short run effect on GDP while monetary policy have a greater long run effect on GDP. Since fiscal policy was found to be more effective than monetary policy in affecting real GDP growth in the short run, improving the quality of public spending should be part of the growthemployment strategy paper implemented in Cameroon through reduction of taxes and deviating government expenditures to productive activities rather than on buying of arms and other unproductive expenditures.

Artículo de revisión

Econometric Analysis of the Impact of Economic Growth and Inflation on Unemployment rate in Tanzania

Moga Tano Jilenga*, Seleman Abas Seleman

Studies on the relationship between unemployment and economic growth both in developed and developing countries is still debatable. This study investigates the impact of economic growth and inflation on unemployment rate in Tanzania. We use time-series data for the period spanning from 1991 to 2020 and the Dynamic Ordinary Least Square (DOLS) technique to analyse the relationship of unemployment and economic growth for the case of Tanzania. The DOLS technique is used due to its superiority in estimating the long-run and short-run coefficients of co-integrated series. The results from the empirical analysis found that there is significant negative long-run relationship between economic growth and inflation with respect to unemployment rate in Tanzania. Thus, both the real Gross Domestic Product and inflation rate are statistically significant in influencing unemployment rate in the long-run. The study recommends that; first, in order to reduce unemployment rate, industrialization is highly encouraged if the country is to promote economic growth. Secondly, monetary and fiscal policies should be used in controlling the flow of money in the economy which results in the control of inflationary negative outcomes.

Artículo de investigación

Small to Medium Enterprises Government-aided Financing in Zimbabwe: A theoretical Perspective

Benson Philip Hlungupi Samudzimu* and Michael Dynamite Benson Munkumba

Small and Medium Enterprises (SMEs) play a crucial role globally in economic development. Thus, its financing becomes key as SMEs play an important role in employment creation, contribution to Gross Domestic Product, export competitiveness and also uplifting the standards of living of people. The paper builds on data collected through a review of various sources and provides in-depth analysis in the context of Zimbabwe as part of an ongoing study on government-aided institutions financing of the SMEs in general and in Zimbabwe in particular-giving new dimensions and perspectives. The study has established that financing models lack situational inclusivity and flexibility to adapt to the new needs of an emerging SMEs sector as key to the success of the SMEs sector in Zimbabwe. The paper further shows that the SMEs financing on the overall is negligible yet SMEs play a major role in contributing to the economy and the extent of Government support is missing the opportunity to accelerate growth of the sector. In the review, the empirical evidence from literature also shows that the efficacy of government-aided institutions in SMEs financing SMEs is undermined by regulatory and policy environment in the financing process of the SMEs. Thus, this paper recommends inclusivity and flexibility in SMEs financing through a review and elimination of funding gridlocks and conditionalities that are attendant, including collateral and administrative charges that are applied by the institutions. The materiality of this flexibility and review is to stimulate growth of the sector to contribute meaningfully to broad-based socio-economic development.

Comunicación corta

Should We Maximize Expected Profits or Maximize the Probability of Realizing Profit Targets? Summary of a Discussion on how to Reconcile these Objectives

Bardia Kamrad, Keith Ord* and Glen M. Schmidt

It is generally accepted in the operations literature that a firm should strive to maximize its expected profit. However, in practice it is not uncommon for a firm to offer a bonus to managers for achieving some pre-established target profit, possibly yielding managerial actions that differ from the profit-maximizing approach (given a profit target, we assume managers will maximize the probability of reaching that target). We use the Newsvendor framework to illustrate how the firm’s shareholders (e.g., through its board of directors) can align these two seemingly different decision approaches: maximizing expected profit vs. maximizing the probability of reaching a target profit. Alignment is achieved by setting what we call an “Aligned Profit Target” (APT) – a target profit that yields the same managerial action namely: contextually, the same stocking quantity across both decision approaches. We find that the APT should typically be an aggressive profit target, one that is significantly higher than the maximum expected profit, with a corresponding low probability of achievement – this result is consistent across demand distributions with light tails (uniform), moderate tails (normal) and heavy tails (lognormal). Notably, the aggressive APT target should be distinguished from any target that the firm might set to signal future profit expectations to financial analysts.

Artículo de investigación

Determinants of Smallholder Farmer’s Wheat Production and Commercialization: The Case Study of Jeldu District, West Shoa Zone, Oromia National Region, Ethiopia

Bikila Tolasa, Oromo Tadesse and Bacha Gebissa*

Wheat is the most important grain crop for food security and is used as a source of income for developing countries. It is one of the most commonly grown crops in Ethiopia in general and in one study area in particular. The government of Ethiopia recognizes the importance of wheat for economic development and emphasizes its production and commercialization in strategies and policies for agricultural transformation. However, wheat production is mainly a subsistence crop and the proportion commercialized has been very small. Therefore, this study should measure the degree of commercialization of wheat, analyze the determinants of wheat production and determine the decision to participate in the commercialization of wheat in Jeldu district. A sample of 369 wheat-producing households was drawn by means of a multi-level sample of producers. The data for the production year 2020/21 was collected in sample households using structured questionnaires. Econometric models were used for data analysis. Under econometrics, Cobb-Douglas production and a double hurdle model were applied. The result of the Cobb- Douglas production using the log-linear model showed that other significant variables such as the age of the head of household, level of education, country size, number of oxen and access to improved seed far from the nearest market and family size a positive effect on the wheat produced was to be expected. The result of the double hurdle model indicated this; expect the distance to the nearest market and family size. Other important variables such as wheat country, number of oxen owned, educational level of household head, access to credit and age of household head initially had a positive effect on the decision to commercialize the hurdle. The intensity of wheat sales is positively influenced by the age of the head of household, the land allocated for wheat production and the number of oxen owned, while family size is negatively influenced in the second hurdle outcome. The study showed that the degree of commercialization of wheat production in the study area was very low. Therefore, strategies and policies to promote the commercialization of smallholders in wheat production should focus on providing rural infrastructure, strengthening adult education, improving agricultural advisory services, improving the provision of inputs, strengthening institutional arrangements, strengthening to improve commercialization and focus on generating excess wheat spend and increase sales.

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