Analyzing Economic Growth From Structural Unobserved Component Modeling: The Case of Senegal

Using the structural unobserved component (UC) modeling, this study will analyze the Senegalese economic growth path after 5 decades of independence by focusing on the potential output, the GDP cycle, and the type of shocks on the GDP. Empirical evidence suggests that an inventory cycle mainly drives the GDP short-term component with a time-varying extent of fluctuations. The main sources of shocks result from external determining factors. However, their persistent effects have been mitigated particularly since the devaluation of 1994. International institutions have motivated the relative successful GDP growth path of Senegal. Nevertheless, some structural internal improvements are needed to balance the financial and productive flaws in order to consolidate both the resilience to shocks as well as the macroeconomic stabilization.