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Journals / İktisat Politikası Araştırmaları Dergisi / 2023 / Cilt: 10 - Sayı: 1

The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone

Emerson Abraham JACKSON
Christopher E.s WARBURTON
Pages
19–35
Publication Date
2023-01-30
DOI
—
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The paper concludes that innovation and energy diversification are important for domestic and external stability in a small open economy.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:In this paper, the authors explored the interaction of macroeconomic variables with some form of vague interrelationships.
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Key Findings & Data:The relevance of factor analysis has demonstrated an existing association between manifest and latent variables in helping the researchers come out with informed and justified suggestions that are relevant to inform effective policy decisions for the central bank action in Sierra Leone.
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Conclusion & Impact:The paper concludes that innovation and energy diversification are important for domestic and external stability in a small open economy.
🔬Design:Research Article
📍Scope:2005 Verileri
⚙️Variables:Bayesian Analysis · Economic Shocks · Exchange Rate

Abstract

In this paper, the authors explored the interaction of macroeconomic variables with some form of vague interrelationships. The relevance of factor analysis has demonstrated an existing association between manifest and latent variables in helping the researchers come out with informed and justified suggestions that are relevant to inform effective policy decisions for the central bank action in Sierra Leone. We examine the relationships among some significant manifest and latent variables in a small open economy (Sierra Leone) using time series data spanning from 2005 to 2020. Both international crude oil prices and the local currency in circulation were found to be loadable under two factors (domestic and external), while the exchange rate was observed to be loaded under the external factor. The outcome also proved that the effects of domestic and international economic shocks (sudden but temporarily disrupted) converged (dissipated) after six to eight months. The paper concludes that innovation and energy diversification are important for domestic and external stability in a small open economy.

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Cite This Article

JACKSON, E. A., WARBURTON, C. E. (2023). The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone. İktisat Politikası Araştırmaları Dergisi, Cilt: 10 - Sayı: 1, 19–35. https://ajindex.com/articles/886547

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References (3)

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