R-ECONOMY

Relevance: The stability of money demand is essential for effective monetary policy, especially in Sub-Saharan African (SSA) countries that face various economic challenges. These challenges include volatile exchange rates, fluctuating foreign interest rates, and high inflation, all of which can disrupt money demand stability. Understanding how these dynamics interact with different income levels-upper middle, lower middle, and low-is crucial for developing effective regional monetary policies and achieving economic stability. Research Objective: This study aims to evaluate the stability of money demand across different income levels-upper middle, lower middle, and low-in SSA. By applying the cash-in-advance theory, the study seeks to provide insights and actionable policy recommendations on the influence of key economic variables. Data and Method. This study employs the cross-sectional augmented autoregressive distributed lag (CS-ARDL) model to analyze both the short- and longrun influences of real exchange rates, foreign interest rates, real GDP, and inflation on money demand. By doing so, it aims to provide a nuanced understanding of money demand stability, capturing variations often overlooked in existing research. The analysis uses data from the World Bank Indicators and the International Monetary Fund (IMF), allowing for a detailed examination of money demand stability across various income levels in the region. Results. The findings reveal a positive and significant relationship between the real exchange rate, foreign interest rates, real gross domestic product, and real monetary aggregates. However, inflation has a contractionary effect on the real monetary aggregate, destabilizing money demand. Money demand stability is observed in upper-middle and low-income countries, while lower-middle-income countries exhibit variability, indicating differing levels of economic resilience across income categories. Conclusion. The study recommends adopting unified monetary policies and a single currency to enhance stability and stimulate economic growth in the region. Additionally, implementing inflation-targeting policies can further strengthen economic stability and promote sustainable development in SSA.

Relevance. Urbanization is a crucial transformative process that plays a key role in achieving sustainable economic development in the global economy. An urbanized economy can serve as a vital structural mechanism to foster inclusive economic growth by generating employment, reducing income inequalities, and alleviating poverty. However, Sub-Saharan Africa (SSA) is characterized by a unique and slow urbanization process that sets it apart from other regions, despite steady economic growth in recent decades. Research Objective. This study aims to empirically assess the patterns and determinants of urbanization in SSA, focusing on the question of whether it is driven primarily by mere economic survival or by improvements in quality of life. Data and Methods. Based on Lee’s rural push-urban pull migration theory, the Common Correlated Effects Mean Group estimator was used to analyze data from 44 SSA countries between 1996 and 2022. Results. Access to basic amenities has a positive and significant impact on urbanization in Africa, although the effect was more modest for improved amenities. Additionally, the agricultural sector was found to hinder urbanization, while the manufacturing and services sectors promote it through structural transformation. Conclusion. The paper concludes that urbanization in SSA is driven by both the need for economic survival and the desire to improve quality of life. To enhance the region’s global competitiveness, it is crucial to invest in and develop critical infrastructure that supports the urbanization process.