DO CREDIT AND GOVERNMENT SPENDING AFFECT COFFEE EXPORT?

Our work aims to analyze the effects of private-sector credit and government consumption expenditure on quantity of coffee export at the macroeconomic level. We develop a panel path analysis model to analyze the direct and indirect effects of private sector credit and government consumption expenditure in nine coffee exporting countries. Our empirical results show that private sector credit has a positive impact on coffee export quantity directly. The impact of private sector credit is found to be insignificant indirectly through comparative and competitive advantages of coffee exports. Government consumption expenditure has a direct positive impact on coffee export quantity but an indirect significant negative impact through comparative advantage. The impact of government consumption expenditure was found to be insignificant indirectly through competitive advantage.