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Mutuku Cyrus Muthuka

Mutuku Cyrus Muthuka, Assistant LecturerMutuku Cyrus Muthuka, Assistant LecturerAssistant Lecturer,
P.O. Box  342- 01000 Thika
Tel. 0724738402
Email : This email address is being protected from spambots. You need JavaScript enabled to view it.

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Bio- Data

Mr Mutuku  holds a B.A Economics and Mathematics from Kenyatta university, Master of Banking and Finance from Moi university and MA Economics from university of Nairobi. He is an assistant lecturer in Mount Kenya university, school of Economics. Prior joining Mount Kenya university he lectured in various universities including, Dedan  Kimathi university of Technology, Technical university of Kenya and Kenya institute of management. He has also worked at Kenya Institute of Public Policy Research and Analysis as a young professional in Macroeconomics Division. His research interests are in public Finance, Banking, Macroeconomic policy and Financial markets.

Selected Publications

1. Mutuku, C. M. and Kimani, D.K (2012).Investigating Wagner’s law: public Finance. Cointegration and causality test for Kenya. Current Research Journal of economic theory.
Wagner's law is widely held as the first model of public expenditure in the history of public finance. It is an antithesis of the Keynesian postulation that Government expenditure causes economic growth hence taking the former as a policy instrument. This study contributes to the existing literature by assessing the empirical evidence of Wagner’s law in Kenya for the period of 1960-2009. It applies cointegration analysis in the investigation of long-run relationship between public expenditure and GDP. The existing literature reveals that Cointegration is a necessary condition to establishing a long-run relationship between public expenditure growth and income. However, in support of the Wagner's law, the required sufficient condition is the existence of a unidirectional causality from GDP to public expenditure. The study employed the Engle and Granger twosteps cointegration test, Granger causality test and time series aggregated data to carry out the test. The findings reveal that two versions of the law meet the necessary and sufficient condition hence, the Wagner’s law holds in Kenya for the entire period under study.

 2. Mutuku, C.M. and Koech, E. (2014). Monetary and fiscal policy shocks on economic growth in Kenya: VAR Econometric approach. Journal of World Economic Research.

 In macroeconomic policy design and management, monetary and fiscal policies are of great essence. However, therelative effectiveness of these policies has been subject to debate in both theoretical and practical realms for a long period of time. This paper investigated the relative potency of the policies in altering real output in Kenya using a recursive vector autoregressive (VAR) framework. The analysis of variance decomposition and impulse response functions reveled that fiscal policy has a significant positive impact on real output growth in Kenya while monetary policy shocks are completely insignificant with fiscal policy shock significantly alters the real output for a period of almost eight quarters.
Keywords: Monetary Policy, Fiscal Policy, Vector Autoregressive Model, Real Output, Policy Design

3. Mutuku, C.M and Kimani, D.K.(2012). Inflation dynamics on the overall stock market performance: The case of Nairobi securities Exchange in Kenya. Journal of Economics and Finance Review.

This study investigated the impact of inflation, Central Depository System (CDS) and other macroeconomic variables (including deposit rate, gross domestic product terms of trade and the net effective exchange rate) on the Nairobi stock market performance using quarterly data from the CentralBank of Kenya (CBK) and theNairobi Stock Exchange (NSE) for the period December 1998 to June 2010. Unit root test based on the formalADF test procedure reveals that the set of variables is a I(1) process while the Johansen Juselius VAR basedcointegration test procedure reveals more than 4 cointegrating relationships. Consequently, an error correction model was estimated revealing that 27 percent of the departure from equilibrium is cleared quarterly. The cointegrating model indeed shows that there is a negative relationship between inflation and stock market performance in Kenya. In addition the CDS is shown to have a positive and significant impact on the stockmarket performance.

 4. Putunoi .G.K &  Mutuku, C.M. (2012). Domestic debt and economic growth nexus in Kenya. Current Research Journal of Economic Theory.

 Literature is scanty on the relationship between domestic debt and economic growth with most researchers focusing on external debt. However, the shift in the composition of overall public debt in favour of domestic debt in sub-Saharan Africa countries has brought to the fore the need for governments to formulate and implement prudent domestic debt management strategies to mitigate the effects of the rising debt levels. This study investigates the effects of domestic debt on economic growth in Kenya. The issue is examined empirically using advanced econometric technique and quarterly time series data spanning 2000 to 2010. The Jacque Bera (JB) and Augmented Dickey-Fuller (ADF) tests have been used preliminarily in investigating the properties of the macroeconomic time series in the aspect of normality and unit roots respectively. The long run relationship betweenthe variables was investigated using the Engel-Granger residual based and Johannes VAR based cointegration tests. There is evidence of cointegration hence an error correction model has been used to capture short run dynamics. The study shows that domestic debt expansion in Kenya, for the period of study, has a positive and significant effect on economic growth. In view of this, the study recommends that the Kenyan government should encourage sustainabledomestic borrowing provided the funds are utilized in productive economic avenues.
Keywords: Economic growth, debt management, public domestic debt, size of government

5. Mutuku, C. and Koech, E. (2014).Foreign direct inflows and economic growth nexus in Kenya: Co-integration and causality analysis. British Journal of Economics, Management and Trade.
The study focused on the co-integration and causality analysis between FDI and GDP for Kenyasing annual data spanning 1970 t0 2013. It was established that though the two variables are I(1),they are co-integrated. The VECM framework revealed that FDI has a significant influences GDP both in the long run and short run. A unidirectional causality was established from FDI to GDP, while impulse response functions revealed that a shock in any of the two variables significantly affects each other for a period of one year. The study concludes that FDI enhancing policies would be necessary for economic growth in Kenya.
Keywords: FDI inflows; economic growth; multivariate granger causality; VAR; VECM.

 6.Mutuku, C. and Ng’eny, K. L. (2014). Macroeconomic variables and the Kenyan equity market: A time series analysis. Journal of Business and Economic Research.
 The study investigates the dynamic relationship between stock prices and four macroeconomic variables in Kenya using cointegration and vector autoregressive framework. The VAR and VECM analysis reveals that macroeconomic variables drive equity market in the long run. The variables in the VAR model are co integrated with 3.8% disequilibrium being corrected quarterly. Notably, inflation has a negative effect on equity market suggesting that policy authorities in Kenya should design polices that mitigate inflation for stock market to develop. The results confirm that stock market is not an avenue for perfect hedge against inflation.
Keywords: Stock market, VAR, VECM, Macroeconomic variables.

 7. Ng’eny, K. L. and Mutuku, C. (2014). Impact of foreign direct investment volatility on economic growth in Kenya. Economics

This study investigated the impact foreign direct investment volatility on growth in Kenya using time series data spanning 1970 to 2011. An endogenous growth model was estimated using the ordinary least squares to determine the relationship between the FDI volatility and economic growth. Bounds testing approach was employed to show that FDI volatilityretards long-run economic growth in Kenya. Results suggest that FDI has a positive effect on growth whereas FDI volatility has a negative impact on growth. Notably, trade openness is not FDI inducing, thus affecting growth negatively. However, human capital endowment has a positive impact on growth. Although the overall effect of Foreign Direct Investment on economic growth is positive the volatility of capital flows may make it harder for the stable and predictable macroeconomic policies to befollowed. Therefore, unstable inflows may dampen investment, hence affecting economic growth.
Keywords: Gross Domestic Product, Foreign Direct Investment Volatility, Arch, ARDL, EGARCH