An econometric model of the Malawian economy

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    11 Citations (Scopus)

    Abstract

    This paper has estimated a small-open economy macroeconomic model for Malawi. The structure of the model consists of production, expenditure, government, monetary, employment sectors and prices. The estimated parameters of the long run version of the model were used to perform simulation experiments to determine the model's tracking performance of the historical data and to assess the effects of changes in selected exogenous variables on key macroeconomic variables. The dynamic simulation results indicate that a sustained devaluation of the Malawi kwacha improves the real trade balance, but leads to higher inflation and reduces real GDP growth. Bond-financed increases in government consumption expenditures are less inflationary, lead to higher real GDP growth, but worsen the real trade balance position. The short run version of the model was estimated using the cointegration estimation technique.

    Original languageEnglish
    Pages (from-to)295-330
    Number of pages36
    JournalEconomic Modelling
    Volume19
    Issue number2
    DOIs
    Publication statusPublished - 2002

    Keywords

    • Cointegration
    • Macroeconomic model

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