D(TO(-1)) -6.396712 13.19761 -0.484687 0.6349
D(TO(-2)) 23.40369 11.81249 1.981267 0.0662
CointEq(-1) -0.194786 0.076544 -2.544767 0.0224 Long Run Coefficient
TGE -113.0415 45.27839 -2.496589 0.0247
RER 0.845676 0.840872 1.005713 0.3305
TO 91.76089 99.63402 0.920979 0.3716
C -1863.958 1515.251 -1.230131 0.2376
Source: Data output via E-views 9.0
From Table 4.2.18, in both short and long run, total government expenditure has significant negative relationship with gross fixed capital formation. Real exchange rate and trade openness have insignificant negative relationship with gross fixed capital formation in the short run but positive in the long run.
4.2.19: The relationship between IMF conditionality and NS of Uganda
Table 4.2.19: ARDL Short and Long Run Relationship NS→TGE, RER and TO
Short Run Co-integrating Form
Variable Coefficient Std. Error t-Statistic Prob.
D(TGE) -8.055616 2.894256 -2.783312 0.0103
D(RER) -1.369776 0.366082 -3.741721 0.0010
D(TO) 12.74001 10.95173 1.163287 0.2561
CointEq(-1) 0.064134 0.072244 0.887736 0.3835 Long Run Coefficient
TGE 125.6062 144.5066 0.869207 0.3933
RER 0.920954 1.897343 0.485391 0.6318
TO -198.6469 250.1555 -0.794094 0.4349
C 506.2484 3648.005 0.138774 0.8908
Source: Data output via E-views 9.0
On the side of national savings, Table4.2.19 discloses that IMF conditionality: total government expenditure and real exchange rate have significant negative relationship with national savings of Uganda in the short run but insignificant positive relationship in the long
run. In the short run, trade openness was observe to have negatively related with national savings but positively in long run.
4.2.20: Effect of IMF Conditionality on Economic Growth of Uganda Restatement of Hypotheses for Uganda
1. H0: IMF conditionality albeit total government expenditure, real exchange rate and trade openness has no significant effect on gross domestic product of Uganda.
2. H0: IMF conditionality albeit total government expenditure, real exchange rate and trade openness has no significant effect on gross fixed capital of Uganda.
3. H0: IMF conditionality albeit total government expenditure, real exchange rate and trade openness has no significant effect on national savings of Uganda.
Table 4.2.20a: Granger Causality test result (Uganda)
Null Hypothesis: Obs F-Statistic Prob. Remarks
TGE does not Granger Cause GDP GDP does not Granger Cause TGE
30
0.00688 2.18534
0.9345 0.1509
No Causality No Causality RER does not Granger Cause GDP
GDP does not Granger Cause RER
30
0.57336 6.88176
0.4555 0.0141
No Causality Causality TO does not Granger Cause GDP
GDP does not Granger Cause TO
30
17.8766 0.04830
0.0002 0.8227
Causality No Causality TGE does not Granger Cause GFCF
GFCF does not Granger Cause TGE 30
0.08594 1.45177
0.7716 0.2387
No Causality No Causality RER does not Granger Cause GFCF
GFCF does not Granger Cause RER 30
0.16754 6.92597
0.6855 0.0139
No Causality Causality TO does not Granger Cause GFCF
GFCF does not Granger Cause TO
30
11.5563 0.10850
0.0021 0.7444
Causality No Causality TGE does not Granger Cause NS
NS does not Granger Cause TGE 30
0.06496 0.75776
0.8007 0.3917
No Causality No Causality RER does not Granger Cause NS
NS does not Granger Cause RER 30
3.35990 8.46269
0.0779 0.0072
No Causality Causality TO does not Granger Cause NS
NS does not Granger Cause TO
30
1.56286 0.07125
0.2220 0.7916
No Causality No Causality
Source: Data output via E-views 9.0
Table 4.2.20b: Summary Statistics – Testing Hypotheses (Uganda)
Hypothesis Variables F-statistic P-Value Decision Hypothesis 1 GDP → TGE, RER, TO
TGE 0.00688 0.9345 Accept H0
RER 0.57336 0.4555 Accept H0
TO 17.8766 0.0002 Reject H0
Hypothesis 2 GFCF → TGE, RER, TO
TGE 0.08594 0.7716 Accept H0
RER 0.16754 0.6855 Accept H0
TO 11.5563 0.0021 Reject H0
Hypothesis 3 NS → TGE, RER, TO
TGE 0.06496 0.8007 Accept H0
RER 3.35990 0.0779 Accept H0
TO 1.56286 0.2220 Accept H0
Source: Granger Causality Analysis Output from Table 4.2.20
With regard to the effect of IMF conditionality on growth fundamentals in Uganda all the null hypotheses were accepted indicating that IMF conditionality actually affected the economy of Uganda. However, Trade Openness exerts negative effect on GDP and GFCF of Uganda. Table 4.2.20 also unveils that IMF conditionality: total government expenditure, real exchange rate and trade openness have no significant effect on gross domestic product, gross fixed capital formation and national savings. Gross domestic product and gross fixed capital formation were observed to have been significantly influenced by trade openness. The mechanism of gross domestic product, gross fixed capital formation and national savings in Uganda determine real exchange rate as IMF conditionality.
4.2.21 Sub Saharan African Nations Panel Co-integration Test/Long Run Relationship The panel unit root test through LLC and Breitung unit root test in Tables 4.1.3, to 4.1.8 affirm the stationarity of the variable at first difference thus testing the co-integration equilibrium relationship between the variables of interest is justified. Kao’s residual and Johansen Fisher panel co-integration were the two structure of panel analysis co-integration that was employed. The results of the Kao’s residual co-integration test for the models are summarized in Table 35, while that of Johansen Fisher panel co-integration is highlighted in Tables 36 – 38.
4.2.21.1 Kao Residual Co-integration Test Table 4.2.21.1 Kao Residual Co-integration Test
Models Argumented Dickey-Fuller Decision t-Statistic Prob.
GDPSSAN → TGE, RER, TO -7.757076 0.0045 Reject H0
GFCFSSAN → TGE, RER, TO -8.466490 0.0004 Reject H0
NSSSAN → TGE, RER, TO -6.819085 0.0464 Reject H0
Source: Computer output data using E-views 9.0
Notes: The ADF is the residual-based ADF statistic. The null hypothesis is no co-integration. (*) and (**) indicate that the estimated parameters are significant at the 1% and 5% level respectively
Kao panel co-integration is a follow up of the Engle-Granger co-integration mechanism. The Kao co-integration test has two tests statistics: Dickey-Fuller types test and Argumented Dickey-Fuller type test. Table 4.2.21.1 divulges that the p-values of the t-statistic for the three models are significant at 5% level of significance thus the null hypothesis of no co-integration is rejected. With this as the case, there is a clear long run equilibrium relationship between gross domestic product, gross fixed capital formation, national savings of Sub Saharan African nations and International Monetary Fund conditionality.
4.2.21.2 Johansen Fisher Panel Co-integration
In the estimation of the long run relationship between variables of interest using the Johansen Fisher co-integration, two approaches are considered to make inference:
likelihood ratio trace statistics and maximum eigenvalue statistics. Johansen Fisher panel co-integration is a follow up of the conventional Johansen’s time-series co-co-integration test where mixed order of integration is allowed or considered. This is to say in essence that possible bias by virtue that all variables are not integrated in the same order is perfectly taking into consideration. The addition of the Johansen Fisher panel co-integration is to further authenticate the outcome of the Kao’s residual co-integration test depicted in Table 4.2.21.1
Table 4.2.21.2: GDPSSAN → TGE, RER, TO Johansen Fisher Panel Co-integration Test
Unrestricted Co-integration Rank Test (Trace and Maximum Eigen Value) Hypothesized
Number of CE(s)
Fisher’s Stat.
(from Trace Test)
Prob.** Fisher’s Stat. (from Maximum Eigen Test)
Prob.**
None 38.95*** 0.0000 26.51*** 0.0031
At most 1 19.20 0.0378 16.60 0.0837
At most 2 10.14 0.4287 6.420 0.7788
At most 3 18.20 0.0517 18.20 0.0517
Source: Computer output data using E-views 9.0
Notes: P-values are computed using asymptotic Chi-square distribution. *** indicate that the test statistics are significant at the 1% level. Fisher’s test applies regardless
of the dependent variable.
Table 4.2.21.3: GFCFN → TGE, RER, TO Johansen Fisher Panel Co-integration Test
Unrestricted Co-integration Rank Test (Trace and Maximum Eigen Value) Hypothesized
Number of CE(s)
Fisher’s Stat.
(from Trace Test)
Prob.** Fisher’s Stat. (from Maximum Eigen Test)
Prob.**
None 32.51*** 0.0003 30.57*** 0.0007
At most 1 10.76 0.3768 10.88 0.3670
At most 2 5.234 0.8750 4.870 0.8997
At most 3 10.08 0.4336 10.08 0.4336
Source: Computer output data using E-views 9.0
Notes: P-values are computed using asymptotic Chi-square distribution. *** indicate that the test statistics are significant at the 1% level. Fisher’s test applies regardless
of the dependent variable.
Table 4.2.21.4: NSSSAN → TGE, RER, TO Johansen Fisher Panel Co-integration Test
Unrestricted Co-integration Rank Test (Trace and Maximum Eigen Value) Hypothesized
Number of CE(s)
Fisher’s Stat.
(from Trace Test)
Prob.** Fisher’s Stat. (from Maximum Eigen Test)
Prob.**
None 27.95*** 0.0018 23.15*** 0.0102
At most 1 12.69 0.2414 12.14 0.2758
At most 2 6.734 0.7503 4.375 0.9289
At most 3 13.76 0.1843 13.76 0.1843
Source: Computer output data using E-views 9.0
Notes: P-values are computed using asymptotic Chi-square distribution. *** indicate that the test statistics are significant at the 1% level. Fisher’s test applies regardless
of the dependent variable.
The result of the Johansen’s Fisher panel co-integration test as presented in Tables 4.2.21.2-4.2.21.3 for the three models envisage the presence of one co-integrating equation each at the 1% significant level. The test of co-integration using the two panel co-integration tools: Kao co-integration (Table 4.2.21.1) and Johansen Fisher co-integration (Tables 4.2.21.2-4.2.21.4) affirm the presence of a long run relationship between International Monetary Fund conditionality and economic growth of selected Sub Saharan African countries with respect to gross domestic product, gross fixed capital formation and national savings.
4.2.22 Nature of Sub Saharan African Nations Panel Co-integration/Long Run