Real Business Cycles Synchronisation and Characteristics in Selected African Countries

The 2007/2008 global financial crisis highlights the need for an extensive business cycle fluctuation research. The study examines business cycle fluctuations in selected African countries. It establishes and characterises business cycles in Africa countries by the investigation of business cycle synchronisation across African countries using the Hodrick-Prescott filter to verify the existence of business cycles in Africa as well as the cyclical characteristics. The results indicated that business cycles exist in Africa. The cyclical features are also described using the Hodrick-Prescott filter. The pair-wise correlation matrix was utilised in investigating the existence of business cycle synchronisation in Africa. From the results, it is discovered that the business cycle synchronisation exists in Africa. The degree of synchronisation, however, varies across different countries. The existence of a strong procyclicality between government spending and real GDP indicates the strong influence of government spending on macroeconomic fluctuations. Therefore, the study recommends that the government and its institutions should carry out a proper fiscal policy plan alongside monetary policy to stabilise the economy in periods of recession and expansion. Furthermore, the study highlights the need for diversification of the export base of most Africa countries from agricultural raw materials to consumer goods.