The Fiscal Responsibility and Budget Management (FRBM) Act, 2003 imposes fiscal discipline on governments by limiting the fiscal deficit to a manageable level of 3% of the GDP. With fiscal consolidation, a reduced fiscal deficit decreases interest payment and debt servicing and permits governments to prioritise spending on capital expenditure or social sector expenditure. By reducing the revenue deficit, falling interest payments further increases the scope of capital outlay. This paper examines the causal relationship between fiscal deficit, interest payment, social sector expenditure and capital outlay, using panel data on state finances of seventeen major states of India years over a time period 2000-2023. The panel data analysis, based on the Johansen cointegration test, Granger causality test and error correction mechanism shows that there is a long-run relationship between gross fiscal deficit, capital outlay and interest payment. And there is long-run causality running from interest payment to capital outlay. Though there is short-run causality, there is no long-run
causality running from aggregate social sector expenditure to gross fiscal deficit. The estimated results suggest that many state governments have increased their capital expenditure with a reduction in gross fiscal deficit and interest payment.

Keywords: Fiscal deficit, interest payment, government expenditure, causality, cointegration, error correction

This study addresses a critical gap in the literature by examining the impact of Nigeria's 2023 exchange rate unification on exchange rate volatility, a crucial factor for economic stability, particularly in emerging markets. The recent unification has introduced unprecedented challenges and complexities that have not been thoroughly investigated in existing research. Using EGARCH and event study methods, the analysis reveals significant and prolonged spikes in abnormal volatility surrounding the announcement, reflecting heightened market uncertainty in the face of these transformative changes. The findings underscore the urgent need for well-crafted
policies tailored to emerging market contexts, including clear communication, supportive fiscal and monetary strategies, and continuous monitoring of market conditions. Such measures are essential for managing the transition effectively and ensuring longterm economic stability. Ultimately, this study contributes valuable insights into the dynamics of exchange rate policies in emerging markets, providing a framework for policymakers to navigate the challenges associated with currency unification and its effects on volatility.

Keywords: Exchange rate unification, Volatility modeling, EGARCH model, Event study, Emerging markets
JEL Codes: C100, C580, E300

This paper analyzes the effect of Foreign Direct Investment (FDI) on industrialization in Sub-Saharan Africa. Using panel data on 30 countries over the period 1996-2019, we apply a dynamic spatial panel regression. The results show that FDI contributes positively to industrialization. Moreover, there is a spatial effect that improves the estimations. Thus, a country whose neighbors have received more FDI is more likely to industrialize than a country that does not have these assets.

Keywords: Foreign Direct Investment, Industrialization, Spatial effects, sub-Saharan Africa.
JEL: O140