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SPILL OVER EFFECTS OF US QUANTITATIVE EASING AND TAPERING ON SUB SAHARAN AFRICA ECONOMIES (2007-2023)

. Morka Augustine Azuka, Chinwe R. Okoyeuzu, Mazeli, Edith Nkiru, Uma, Idika Kalu, Akpeh, Caroline Onyetorochi & Okwor Emmanuel Ejimnkonye


Abstract

This research work examined the spill over effects of US quantitative Easing and Tapering (QE&T) on the economies of SSA for the period covering 2007 to 2023. To achieve this objective, secondary data sourced from International Financial Statistics and World Bank Development Indicators (WDI) repositories were used. The study was divided into two parts. Part one looked at the Effects of US Quantitative Easing (QE) on SSA economies, while part two, examined the Effects of Tapering on these economies. QE&T, proxied by US 10year Bonds (USBDY) was used as the major regressor, while macroeconomic variables of External Reserves (EXTRS) and Inflation (INFL) were employed as dependent variables and Exchange Rates (EXCR), Foreign Direct Investments (FDI) and Portfolio Flow (PFLOW) were used as control variables. The Panel Fully Modified Other Least Squares (PFMOLS) estimation technique was applied to test the formulated hypotheses and address research questions raised by the study. Our result revealed that US Quantitative Easing exerted lesser but significant reducing influence on inflation rate, while tapering had much more significant reducing effects on these economies. Conversely, Tapering impacted positively and significantly on external reserves, while QE showed no significant effect on the economies of these countries. We recommend that SSA governments should leverage on the positive outcome of External Reserves and put in place effective monetary policies that will protect their local investors from dominance of foreign Investors so as to build a good external reserve

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