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Paper Type:Research
Paper Title:Rethinking Error Correction Model in Macroeconometric analysis: A Relevant Review
Author:Christian P. Pinshi
About Author: University of Kinshasa, Researcher
Page No:73-79
Article Info

The cointégration methodology has bridged the growing gap between economists and econometricians in understanding dynamics, equilibrium and bias on the reliability of macroeconomic and financial analysis, which is subject to nonstationary behavior. This paper proposes a comprehensive literature review on the relevance of the error correction model. Econometricians and economists have shown that error-correction model is a powerful machine that provides the economic system and macroeconomic policy with a refinement in the econometric results1.

Cointegration, Error correction model, Macroeconomics JEL Classification : C32, E0
1) Adouka L.,Kchirid EM., Benzekoura A. andBouguelli Z. (2013).Modélisation de la fonction de la demande des dépenses publiques algérienne à l’aide de modèle ECM.European Scientific Journal, vol.9, N°.22, August.

2) Banerjee A. and Hendry D. V. (1992). Testing integration and cointégration: an overview.Oxford bulletin of economicsc and statistics.

3) Box G.E.P. and Jenkins G.M. (1976). Time Series Analysis : Forecasting and Control. Holden-Day, San Francisco.

4) Castle J. L. and Hendry, D. F. (2016). Clive W.J. Granger and cointegration economics.Department and Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, UK, december.

5) Davidson J. E. H., Hendry D. F., Srba F. and Yeo S. (1978). Econometric Modelling of the Aggregate Time-Series Relationship Between Consumers' Expenditure and Income in the United Kingdom. The Economic Journal, Vol. 88, No. 352, december.

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7) Engle R. F. and Granger C. W. J. (1987). Co-integration and error correction: representation, estimation and testing. Econometrica, vol.55, n°2, march.

8) Eslamloueyan K.andDarvishi A. (2007). Credit expansion and inflation in Iran: An unrestricted error correction model.Iranian Economic Review, Vol.12, N°19.

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12) Granger C. W. J. and Newbold P. (1977). The time series approach to econometric model building.In New methods in business cycle research, Sims ed. Federal Reserve Bank of Mineapolis.

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20) Lau S. H. P. (2008). Using an error-correction model to test whetherendogenous long-run growth exists.Journal of Economic Dynamics & Control, vol.32, june.

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Paper Type:Research
Paper Title:COVID-19 Uncertainty and Monetarypolicy
Author:Christian P. Pinshi
About Author:University of Kinshasa
Page No:80-94
Article Info

The COVID-19 pandemicis influencing the management of monetarypolicy in its role as regulator of aggregate demand and guarantor of macroeconomicstability. We use a Bayesian VAR framework (BVAR) to provide an analysis of the COVID-19 uncertainty shock on the economy and monetarypolicy response. This analysis shows important conclusions. The uncertainty effect of COVID-19 hits unprecedented aggregate demand and the economy. In addition, it undermines monetary policy action to soften this fall in aggregate demand and curb inflation impacted by the exchange rate effect. We suggest a development of unconventional devices for a gradual recovery of the economy.

Uncertainty, COVID-19, Monetarypolicy, Bayesian VAR
JEL Classification:
C32, E32, E51, E52, E58
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