expenditure (0.00<0.05), real exchange rate (0.008<0.05) and trade openness (0.00<0.05).
The nature of the long run relationship between International Monetary Fund (IMF) and national savings of Sub Saharan Africa nations is also positive except for real exchange rate.
As show in Table 41, total government expenditure and trade openness are positively related with national savings and statistically significant, while real exchange rate. This points the reality that in fulfilment of International Monetary Fund to accessing aid by most countries in Sub Saharan is detrimental to savings.
R-squared 0.954984 0.963593 0.954984
Adjusted R-squared 0.953742 0.953236 0.953742
S.E. of regression 21278.62 21394.55 21278.62
Sum squared resid 6.57E+10 5.31E+10 6.57E+10
Log likelihood -1705.117 -1689.196
F-statistic 769.0117 93.03740 769.0117
Prob(F-statistic) 0.000000 0.000000 0.000000
Durbin-Watson stat 1.725091 1.710544 1.725091
Hausman Specification Test Chi-Sq. Statistic 5.595346
P-value 0.231500
Source: Computer output data using E-views 9.0
Note: Periods included: 30, Cross-sections included: 5, Total Number of Observations: 150 The Hausman specification test in Table 4.2.23.1 unveils that the suitability of the random effect estimation which reveals that total government expenditure (significant) and trade openness (insignificant) have positive relationship, while real exchange rate has insignificant negative relationship with gross domestic product of Sub Saharan African nations. Holding the three IMF conditionality albeit total government expenditure, real exchange rate and trade openness constant, Sub Saharan African nations gross domestic product would stand at $-679.82 million. A unit rise in total government expenditure and trade openness result in
$119.28 million and $93.72 million increase in Saharan African nations’ gross domestic product respectively. On the contrary, a percentage increase in real exchange rate depreciation evidences $1.43 million depreciation in Saharan African nations’ gross domestic product.
The adjusted R-square shows that 95.37% changes in Saharan African nations’ gross domestic product was as a result of variations in IMF conditionality, and this is highly significant as exhibited by the p-value of the f-statistic (0.00 < 0.05). This is to say that IMF conditionality with regard to total government expenditure, real exchange rate and trade openness significantly explained the changes in Saharan African nations’ gross domestic product within the period studies. The Durbin Watson value of 1.72 is within the accepted range of no autocorrelation in the regression panel model.
4.2.23.2 GFCF and IMF Conditionality Relative Statistics Output Table 4.2.23.2: GFCF and IMF Conditionality
Variables Pooled OLS Fixed Effect Random Effect
Coefficient Prob. Coefficient Prob. Coefficient Prob.
C 661.8315 0.4797 1586.916 0.1800 661.8315 0.4812
TGE 17.17318 0.1391 11.82114 0.3581 17.17318 0.1404 RER -0.454177 0.3435 -0.913904 0.1473 -0.454177 0.3452
TO -0.757178 0.9688 -14.63490 0.5036 -0.757178 0.9689
GFCFSSAN(-1) 1.034996 0.0000 1.023442 0.0000 1.034996 0.0000
R-squared 0.925333 0.939857 0.925333
Adjusted R-squared 0.923273 0.922748 0.923273
S.E. of regression 3988.843 4002.475 3988.843
Sum squared resid 2.31E+09 1.86E+09 2.31E+09
Log likelihood -1453.987 -1437.763
F-statistic 449.2379 54.93169 449.2379
Prob(F-statistic) 0.000000 0.000000 0.000000
Durbin-Watson stat 2.182072 2.118301 2.182072
Hausman Specification Test Chi-Sq. Statistic 3.332660
P-value 0.503800
Source: Computer output data using E-views 9.0
Note: Periods included: 30, Cross-sections included: 5, Total Number of Observations: 150 From the hausman test in Table 4.2.23.2, the random effect estimation is favoured as the p-value of the Chi-square is insignificant at 5% level. IMF conditionality of trade openness and real exchange rate have negative relationship, whereas total government expenditure has positive insignificant relationship with gross fixed capital formation in Sub Saharan African nations. Keeping IMF conditionality constant, gross fixed capital formation in Sub Saharan African nations would amount to $661.83 million. A percentage rise in trade openness and real exchange rate result in $0.75 million and $0.45 corresponding decrease in gross fixed capital formation in Sub Saharan African nations. Sub Saharan African nations gross fixed capital formation would be up by $17.17 million following a percentage rise in total government expenditure.
The f-statistic of 449.24 with p-value (0.00) depicts that IMF conditionality through total government expenditure, real exchange rate and trade openness significantly discussed the variation in Sub Saharan African nation’s gross fixed capital formation. Judging from the coefficient of the adjusted R-square, 92.33% variation in Sub Saharan African nation’s gross fixed capital formation was attributed to joint influence of IMF conditionality indices. The Durbin Watson value of 2.1 reveals no autocorrelation in the estimated model.
4.2.23.3 National Savings and International Monetary Fund Conditionality Relative Statistics Output
Table 4.2.23.3: National Savings and IMF Conditionality
Variables Pooled OLS Fixed Effect Random Effect
Coefficient Prob. Coefficient Prob. Coefficient Prob.
C 2390.486 0.4221 5143.954 0.1563 2445.344 0.4122
TGE 55.71253 0.1340 48.78893 0.2327 55.53194 0.1343 RER -1.159311 0.4548 -3.066991 0.1284 -1.199737 0.4397
TO -5.823563 0.9252 -38.68356 0.5715 -6.479206 0.9165
R-squared 0.739006 0.793555 0.739349
Adjusted R-squared 0.731806 0.734825 0.732159
S.E. of regression 12771.14 12699.06 12724.37
Sum squared resid 2.36E+10 1.87E+10 2.35E+10
Log likelihood -1628.540 -1610.955
F-statistic 102.6422 13.51193 102.8250
Prob(F-statistic) 0.000000 0.000000 0.000000
Durbin-Watson stat 2.858725 2.818458 2.858091
Hausman Specification Test Chi-Sq. Statistic 4.578598
P-value 0.333333
Source: Computer output data using E-views 9.0
Note: Periods included: 30, Cross-sections included: 5, Total Number of Observations: 150
The hausman test in Table 44 suggests the acceptability of the random effect estimation as a result of insignificant p-value of the Chi-square. Total government expenditure has insignificant positive relationship with national savings in Sub Saharan African nations, whereas real exchange rate and trade openness evidence negative insignificant relationship.
Total government expenditure, real exchange rate and trade openness at constant would improve national savings by $2,445.34 million. A unit rise in total government expenditure would significantly cause an upsurge in national savings by a magnitude of $55.53 million.
Continuous depreciation of exchange rate of Sub Saharan African nations coupled with volatility in trade balance would equivalently decline national savings by $1.19 million and
$6.47 million respectively.
The F-statistic value (102.83) and p-value (0.00) is a clear evidence that IMF conditionality as expressed through total government expenditure, real exchange rate and trade openness significantly explained the variation in national savings of Sub Saharan African nations.
From the adjusted R-square coefficient, 73.22% variation in national savings in Sub Saharan African nations was accounted by IMF conditionality. There was no autocorrelation problem in the model based on Durbin Watson statistic of 2.8.