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This thesis proposes a new econometric methodology for the estimation and inference of macro- economic models in the presence of time variation in the parameters. A novel quasi-Bayesian local likelihood (QBLL) approach is established and it is shown that the method gives rise to as- ymptotically valid quasi-posterior distributions. In addition, in the special case of linear Gaussian models, expressions of the quasi-posteriors are derived in closed form, which simpli es inference and makes the use of MCMC unnecessary. Inference based on the QBLL approach, as a consequence of modelling parameter variation nonparametrically, is robust to di¤erent processes for the drifting parameters, as its validity does not depend on parametric restrictions typically imposed by alterna- tive state space models. In addition, the Bayesian treatment of the approach provides a remedy to the curse of dimensionality by accommodating large dimensional systems. We demonstrate that the proposed estimators exhibit good nite sample properties, and, unlike the alternative para- metric state space models, are robust to di¤erent parameter processes. We provide a variety of interesting macroeconomic applications and forecasting exercises to reduced-form VAR models. In addition, we develop the methodology to the estimation of structural DSGE models in the presence of parameter drift. We apply the proposed algorithms to di¤erent medium-sized DSGE models in order to study structural change in the parameters.

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This paper examines the possible contribution of evolutionary economics to macro-economic modelling of flood impacts to provide guidance for future economic risk modelling. Most macro-economic models start from a neoclassical economic perspective and focus on equilibrium outcomes, either in a static or dynamic way, and describe economic processes at a high level of aggregation. As a consequence, they typically fail to account for the complexity of social interactions and other behavioural responses of consumers and producers to disasters, which may affect the macroeconomic impacts of floods. Employing evolutionary principles and methods, such as agent-based modelling, may help to address some of the shortcomings of current macro-economic models. We explore and discuss the implications of applying consumer and producer heterogeneity, bounded rationality, network effects, social and technological learning, co-evolution and adaptive policy-making concepts into existing economic frameworks for the assessment of macro-economic impacts of floods. (authors' abstract)

Trade is largely considered a driving force of economic growth and development of nations. To this end, there is vast and far-reaching research on the subject, especially on matters international. However, research on intra-African trade is lacking in comparison to research on trade amongst the rest of the world, not just developed, but also developing countries alike. That aside there are numerous efforts put in place to enhance and encourage trade within and without the continent. The research presented in this thesis aims to investigate and address three key issues specific to intra-Africa trade. The questions asked are: are the measures currently in place successful in the promotion of intra-Africa trade; is the continent ready for measures about to be implemented and after all that, is trade really the key driving force for economic growth and development within Africa? To answer these questions, the research presented here in this thesis employs the gravity modelling approach, the G-PPP test and develops a macro-economic model which is applied to the Kenyan economy. The results indicate that; yes, trade is significant and important in determining economic growth, and while measures taken thus far such as the creation of Economic Integrations have not been as successful as was envisioned, trade openness continues to be among the most important ways in which trade is encouraged and enhanced, to this end, although the continent is yet to fulfil all the requirements for the formation of a full-blown Economic Union, it is ready for drastic measures such as the formation of a currency union. Literature reveals that this could form the basis of hastening complete integration and harmonization of all systems of the participating economies, thereby benefiting not just trade but also all other sectors of the economies.

Mergers and acquisitions play an important role in international financial markets, which explains why this research area attracts of lot of attention from academics, bankers, and investors. Generally, in takeovers, two firms merge in order to achieve specific strategic and business objectives. The ultimate goal is often, but not always, the creation of shareholder value. In many cases, the creation of shareholder value is not the primary objective of the managers, however, which is one of the reasons why takeovers have been associated with the destruction of value in several existing studies. Instead, many M&A decisions are a function of managerial behaviour. In this thesis, I investigate the drivers of M&A activity, and consider both purely rational (neo-classical) and behavioural reasons as managers’ motivations for getting involved in M&A transactions. The thesis’s main body consists of three empirical studies that investigate how M&A activity is driven by macro-economic forces, managerial behaviour and board networks. Chapter 3 investigates whether merger waves are driven by macro-economic determinants and financial markets; Chapter 4 tests whether envy among CEOs has any explanatory power over the appearance of merger waves; Chapter 5 looks at whether board networks affect the relative merits of acquisitions and the probability of acquiring firms in “linked” industries. More specifically, Chapter 3 tests the extent to which US and UK merger waves are driven by macro-economic and financial market factors. Besides the analysis of domestic M&A activity, I also study the drivers of cross-border acquisitions between the UK and the US. I disentangle M&A activities according to how they are financed, and test whether managers follow market timing strategies when engaging in M&A transactions. I find evidence that domestic takeovers in the US and in the UK are highly correlated with the credit cycle and moderately correlated with the business cycle. I also test wave patterns in US and UK merger waves, and find that the merger waves in the two countries are significantly related to each other. Chapter 4 considers the view that irrational managerial behaviour could trigger UK merger waves. In particular, I assume that CEOs assess their own situation relative to those of their peers. If a CEO earns less than his peers, he becomes envious. Since it is established in the literature that firm size and executive compensation are positively correlated, CEOs have an incentive to engage in size-increasing mergers in order to decrease any compensation differential. Cross-sectional envy should therefore be considered as a potential explanation for merger waves. In an interdisciplinary approach, I develop a new measure for envy that is based on theories borrowed from the sociology area. My results from comprehensive tests with this new measure show that envy is unlikely to be an explanation for UK merger waves. Chapter 5 uses social networking theory to examine possible benefits for the acquirer from being well-connected. I assume that strong board networks are associated with better and faster access to information. Building on this rationale, I hypothesize that well-connected acquirers make better acquisitions due to reduced information asymmetries between them and the target. This chapter examines whether board interlocks between the acquirer and the target, existing prior to the acquisition, are associated with superior cumulative abnormal returns for the acquirer. Using centrality measures from social networking theory, I test whether firms that are well-connected make better acquisitions, as measured by the announcement returns of the acquirer. I find acquirer-target board interlocks to be significantly and positively associated with the acquirer’s cumulative abnormal returns. Centrality measures, however, turn out not to have any significant impact on the acquirer’s stock price reaction. Lastly, I show that acquirers are significantly more likely to acquire firms from industries with which they are “linked” via board members that have multiple directorships.

Population projections for sub-Saharan Africa have, over the past decade, been corrected upwards because in a number of countries, the earlier declining trends in fertility stalled around 2000. While most studies so far have focused on economic, political, or other factors around 2000, here we suggest that in addition to those period effects, the phenomenon also matched up with disruptions in the cohort trends of educational attainment of women after the postindependence economic and political turmoil. Disruptions likely resulted in a higher proportion of poorly educated women of childbearing age in the late 1990s and early 2000s than there would have been otherwise. In addition to the direct effects of education on lowering fertility, these less-educated female cohorts were also more vulnerable to adverse period effects around 2000. To explore this hypothesis, we combine individual-level data from Demographic and Health Surveys for 18 African countries with and without fertility stalls, thus creating a pooled dataset of more than two million births to some 670,000 women born from 1950 to 1995 by level of education. Statistical analyses indicate clear discontinuities in the improvement of educational attainment of subsequent cohorts of women and stronger sensitivity of less-educated women to period effects. We assess the magnitude of the effect of educational discontinuity through a comparison of the actual trends with counterfactual trends based on the assumption of no education stalls, resulting in up to half a child per woman less in 2010 and 13 million fewer live births over the 1995-2010 period.

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Political ideologies translate into both rhetoric and actual economic policy, and both are important factors for explaining economic development such as foreign direct investment and the distribution of growth. In Nicaragua, the government calls itself “socialist”, but neither local big business nor rating firms or foreign investors seem to be anxious. In this thesis, an attempt is made to define and measure characteristics of economic ideologies, and to analyse them in a country context.Factors are identified that would be characteristic for a “leftist” or to a “rightist” ideology, and then translated into measurable indicators, used to analyse the rhetoric, planning and legislation in Nicaragua. Actual outcomes are compared with previous liberal and socialist regimes. The result indicates that the actual economic policy of the current “marxist” government can be described as liberal or mildly social democratic. A similar analysis, made of IMF and Moody’s show that their assessments are based on liberal theory.One cause for this discrepancy between rhetoric and economic policy may be that no option is available in the globalised context with its unequal distribution of resources and power.

The main objectives of the study was to determine the exclusivity of the objectives of the regional groupings within the SADC region and to assess the impact that membership overlaps has on the realization of specific regional grouping objectives.A qualitative research approach was adopted. Semi-structured in-depth expert interviews were used to determine the issues arising from regional membership overlaps in the SADC region.Due to limited literature around the subject of regional integration in the SADC region, work done by my supervisor Dr Jannie Rossouw were cited in some instances.Recent developments in the Western economies that have resulted in the refocusing of the SADC region have resulted in polarization amongst the regional groupings in Africa. Furthermore, existing regional groupings within the Southern Africa, have endenvoured on an ambitious regional integration agenda which has resulted in membership overlaps within the existing regional bodies. The study found that these regional overlaps are costing the affected member states in the form of monetary subscription and through the deployment of the rare human skilled resources to regional secretariats. The advent of the European Partnership Agreements has caused polarization within the SADC region through the signing of various bi-lateral and multi-lateral agreements. Most importantly, this study found that structural overlaps exist within SADC itself. A lack of sufficient political will amongst SADC member states was also noted as an impediment to regional integration.However, the study also noted some positive performances of existing regional grouping despite membership overlaps. The Common Monetary Area was highlighted as a grouping that was performing in line with prescribed regional integration convergence indicators. / Dissertation (MBA)--University of Pretoria, 2012. / Gordon Institute of Business Science (GIBS) / Unrestricted