Inputs Prices Shocks and Economic Growth: Comparative Analysis of the Effects of Oil and Cotton Prices Shocks in Burkina Faso

Abstract

This paper analyzes the effects of oil and cotton price shocks on Burkina Faso economic growth using a multivariate VAR model estimation. We have distinguished between the linear and nonlinear specification of oil and cotton price shocks in our study. For the nonlinear specification, we make the difference between prices increase and price decreases. We find that oil price shocks do not affect Burkina Faso’s real GDP in both linear and nonlinear specification. However, we do find that cotton price shocks in linear and nonlinear model, Granger cause real GDP and final consumption. In addition, the study has shown that both positive and negative cotton price shocks affect positively the real GDP.