Real shocks in Africa drive business cycle fluctuations, impacting government spending.
The study looked at how real shocks affect business cycle fluctuations in Africa from 1981 to 2015. Real shocks like changes in commodity prices and government spending can cause ups and downs in the economy. The researchers used a method called Bayesian panel vector autoregressive approach to analyze the data. They found that government spending has the biggest impact on real GDP in African countries, leading to the most variations in economic output. Terms of trade, on the other hand, had a positive effect on the economy.