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Are Real GDP Levels Stationary in A frican Countries?
Author(s) -
Ying Zheng,
Dong ChangRui,
Chang HsuLing,
Su ChiWei
Publication year - 2014
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/saje.12026
Subject(s) - gross domestic product , unit root , real gross domestic product , per capita , economics , econometrics , unit root test , mean reversion , nonlinear system , stationary process , mathematics , macroeconomics , statistics , cointegration , demography , quantum mechanics , sociology , population , physics
In this study, we apply flexible F ourier stationary unit root test proposed by E nders and L ee (2012) to assess the non‐stationary properties of the per capita real gross domestic product ( GDP ) for 32 A frican countries. We find that F ourier stationary unit root test has higher power than linear method if the true data‐generating process of per capita real GDP is in fact a stationary nonlinear process of an unknown form with structural change using the low frequency components. We investigate the stationarity of per capita real GDP from the nonlinear point of view and provide robust evidence that clearly indicates that real output is well characterised by a nonlinear, mean‐reverting process, namely B enin, B otswana, B urundi, C ameroon, S enegal, S ierra L eone and S outh A frica. Our evidence points that these seven countries are nonlinear stationary, implying that per capita real GDP follows a steady rate of growth, and policy innovations then have temporary effects. These results have important policy implications for A frican countries.