Sovereign Debt Thresholds and Inflation Dynamics: Evidence from GIPS (Greece, Italy, Portugal, Spain) Nations (Published)
This study investigates the long-run structural relationships and short-run transitional dynamics of sovereign debt thresholds and inflation dynamics across the Eurozone periphery (GIPS — Greece, Italy, Portugal, and Spain) over the period 2010Q1–2025Q4. The study include inflation rate (INFLR) as the dependent variable, alongside a robust set of independent variables: the Output Gap (TOG), the Sovereign Debt Load (SDL), the natural logarithm of Trade Openness (lnTOP), and the European Central Bank’s centralized Monetary Policy Rate (MPR). Secondary macro-level data for these variables are gathered from recognized institutional data sources, specifically Eurostat’s Government Finance Statistics, the European Central Bank (ECB) Statistical Data Warehouse, and the International Financial Statistics database of the International Monetary Fund (IMF). Methodologically, standard first-generation panel frameworks fail under the weight of regional integration; thus, this paper deploys an advanced second-generation estimation technique, specifically the Dynamic Common Correlated Effects (DCCE) Mean Group estimator operationalized via a Cross-Sectional Error Correction Model (CS-ECM) layout. The empirical findings extracted from the long-run estimation and the short-run estimation yield critical, structurally nuanced insights. In the long run, structural trend inflation (INFLR) is positively and significantly driven by cyclical demand pressures via the output gap (TOG}), a relationship that remains robustly highly significant in the short run (∆TOG), validating the persistent dominance of the New Keynesian Phillips Curve within the periphery. Conversely, for the sovereign debt load (SDL), the long run displays a positive coefficient with marginal statistical significance, whereas short-run fiscal innovations (∆SDL) show complete statistical insignificance due to policy implementation lags. For trade openness (lnTOP), the long run displays weak negative significance, while short-run trade expansions (∆lnTOP) yield a highly significant, massive positive structural pricing impact on inflation dynamics. Finally, the ECB’s centralized monetary policy rate (MPR) displays long-run neutrality due to the currency union’s structural rigidities; yet short-run innovations (∆MPR) exert an immediate, highly significant positive price innovation. In conclusion, the economic reality of the Eurozone periphery demonstrates that localized pricing structures are acutely sensitive to immediate monetary and trade shocks in the short run, yet are governed primarily by structural output gaps and creeping fiscal expansions in the long run. Based on these outcomes, the study recommends that the GIPS authorities transition from rigid fiscal metrics toward targeted structural capacity investments.
Keywords: DCCE mean group, Monetary Policy Rate., long-run structural relationships, output gap, short-run dynamics, sovereign debt loads, structural inflation
The Relationship Between Policy Rates and Domestic Debt in Ghana (Published)
The principal purpose of this study is to investigate the relationship between policy rates and domestic debt in Ghana. Utilizing a time series data, the study adopted the Vector Error Correction Model (VECM) for result analysis. Over the long run, domestic debt was found to have a negative impact on monetary policy rate, with the reverse observed for the short run. However, both models yielded statistically insignificant results. Nevertheless, the study revealed a statistically significant relationship between inflation and real GDP with the monetary policy rate in the long run, indicating a positive and negative impact, respectively. In the short run, only inflation was found to be statistically significant. The study’s findings and analysis were found to be reliable as there was no evidence of serial correlation or heteroskedasticity in the model. In the end, the study was able to address a crucial gap in the literature on public debt by primarily investigating the influence of domestic debt on monetary policy rate in Ghana.
Keywords: Domestic debt, Monetary Policy Rate., vector error correction model
Interest Rate Dynamics and Its Impact on the Performance of the Manufacturing Sub-Sector in Nigeria (Published)
The major focus of the research is to empirically investigate the impact of interest rate dynamics on performance of manufacturing- sub sector in Nigeria. The research covers the period between 1980 and 2019. This period is important since it includes the pre-structural adjustment programme (SAP) era where interest rate was not liberalized and the structural adjustment programme period where interest rate is liberalized. The cointegration technique with its implied error correction mechanism was used for the study. The result shows that the high interest rate in Nigeria has hindered the performance of the manufacturing sub sector. The GARCH and ARCH results indicates that interest rate dynamics has influenced the performance of the manufacturing sub- sector. The result also confirms a long run relationship among the variables. It was therefore recommended amongst others, that there should be a drastic reduction in the interest rate coupled with the adoption of liberalized interest rate regime with some caution; this will increase the performance of the manufacturing sub- sector in Nigeria.
Keywords: Minimum rediscount rate, Monetary Policy Rate., Treasury Bills, and inflationary spiral., manufacturing sub-sector