External Debt-Driven Unemployment, Exchange Rate Volatility, And Interest Rates: Hysteresis Effect Evidence from the Burundian Economy

Résumé fourni par la source

This study examines the determinants of unemployment in Burundi through a vector error correction model (VECM) incorporating the unemployment rate, exchange rate volatility, lending interest rate, their interaction term, and the stock of external debt over the period 1991-2025. The results reveal that external debt is the dominant structural determinant of long-term unemployment (t = -8.217), with a speed of adjustment significantly lower than that of the debt (-0.020 < 2.298), generating a hysteresis effect confirmed by the historical episodes of 2004, 2009, and 2015. Moreover, the analysis of marginal effects shows that the impact of exchange rate volatility on unemployment is not fixed but is conditioned by the prevailing interest rate regime, shifting from a positive and significant effect at low rates to a negative effect beyond an estimated critical threshold of 10.02%. These results highlight a dual hysteresis dynamic— driven by external debt and modulated by the exchange rate-interest rate interaction—and call for strengthened coordination between debt management, exchange rate policy, and monetary policy to sustainably mitigate unemployment in the Burundian economy.

Ce résumé expose les affirmations des auteurs. BNTIC ne l’interprète pas comme une validation indépendante des résultats.