The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone
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 s...
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| Format: | Article |
| Language: | English |
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Istanbul University Press
2023-01-01
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| Series: | İktisat Politikası Araştırmaları Dergisi |
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| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/C22A047B20B54497B9BCDEA9A774CE98 |
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| author | Christopher E. S. Warburton Emerson Abraham Jackson |
| author_facet | Christopher E. S. Warburton Emerson Abraham Jackson |
| author_sort | Christopher E. S. Warburton |
| collection | DOAJ |
| description | 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. |
| format | Article |
| id | doaj-art-30a09ec2c6774e489e4463cd6e70457d |
| institution | DOAJ |
| issn | 2148-3876 |
| language | English |
| publishDate | 2023-01-01 |
| publisher | Istanbul University Press |
| record_format | Article |
| series | İktisat Politikası Araştırmaları Dergisi |
| spelling | doaj-art-30a09ec2c6774e489e4463cd6e70457d2025-08-20T02:57:35ZengIstanbul University Pressİktisat Politikası Araştırmaları Dergisi2148-38762023-01-01101193510.26650/JEPR1082693123456The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra LeoneChristopher E. S. Warburton0https://orcid.org/0000-0001-8461-0014Emerson Abraham Jacksonhttps://orcid.org/0000-0002-2802-6152Houghton University, New-York, United-StatesIn 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.https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/C22A047B20B54497B9BCDEA9A774CE98bayesian analysiseconomic shocksexchange ratefactor loadingsmanifest and latent variables |
| spellingShingle | Christopher E. S. Warburton Emerson Abraham Jackson The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone İktisat Politikası Araştırmaları Dergisi bayesian analysis economic shocks exchange rate factor loadings manifest and latent variables |
| title | The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone |
| title_full | The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone |
| title_fullStr | The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone |
| title_full_unstemmed | The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone |
| title_short | The Econometrics of Factor Loadings and Implications for Monetary Policy in a Small Open Economy (2005- 2020) – Sierra Leone |
| title_sort | econometrics of factor loadings and implications for monetary policy in a small open economy 2005 2020 sierra leone |
| topic | bayesian analysis economic shocks exchange rate factor loadings manifest and latent variables |
| url | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/C22A047B20B54497B9BCDEA9A774CE98 |
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