The impact of the liberalization of the exchange rate and financial markets in sub-Saharan Africa. Editors' introduction

1999 ◽  
Vol 11 (3) ◽  
pp. 317-319
Author(s):  
Giovanni Andrea Cornia ◽  
Nguyuru H. I. Lipumba
Keyword(s):  
Exchange Rate ◽  
Financial Markets ◽  
Sub Saharan Africa ◽  
The Exchange Rate ◽  
Sub Saharan ◽  
The Impact

scholarly journals Impact of Exchange Rate Threshold Level on Stock Market Performance-Evidence from Ghana

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
David Mensah Awadzie
Keyword(s):  
Exchange Rate ◽  
Capital Market ◽  
Market Performance ◽  
Threshold Level ◽  
Sub Saharan Africa ◽  
Series Data ◽  
The Exchange Rate ◽  
Sub Saharan ◽  
Rate Threshold ◽  
The Capital Market

Exchange rate plays a vital role in an economy and the purpose of this study is to investigate the impact of exchange rate threshold level on the capital market performance. The study employed a Threshold Autoregressive model introduced by Tong (1978) and Hansen (1996). The study used secondary quarter-time series data for thirty-years from 1990 to 2019. The capital market performance was measured by the value of shares traded; market turnover; market capitalization and all-shares index. However, the results revealed the following estimated threshold level of exchange rate for each performance indicator: 7.94%; 25.33%; 25.33% and 7.80% respectively. In all, the threshold level of the exchange rate estimated was 8 and 25 per cent. The findings suggest that low exchange rate is performance-enhancing. In addition, the exchange rate above the threshold level is detrimental to the capital market performance. The findings of this investigation might be helpful to the government of Ghana and policymakers as they settle on an exchange rate target to adopt to avoid the detrimental effects of high exchange rate while obtaining the growth benefits of the low exchange rate. It has indicated that the exchange rate impacts the economy more than inflation in the Sub Saharan Africa but, not much works in the subject area in Sub Saharan Africa. Therefore, I recommend that more threshold studies have to be carried out on the exchange rate in the other sectors of the economy to ascertain its impact on the economy.

scholarly journals Lending Rate, Exchange Rate and Household Consumption Relations in Sub-saharan Africa: Mean Group Approach

2020 ◽  
Author(s):  
Abayomi Toyin Onanuga ◽  
Sheriffdeen Adewale Tella
Keyword(s):  
Exchange Rate ◽  
Consumer Credit ◽  
Household Consumption ◽  
Policy Implications ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Lending Rate ◽  
The Exchange Rate ◽  
Sub Saharan ◽  
The Cost

Abstract Household consumption expenditure in Africa to the world aggregate is comparatively little, considering the population of the region. But empirical credence that elucidates estimated elasticities of the exchange rate, lending rate, and consumption relations remains dimply discerned in sub-Saharan Africa (SSA) amidst a high population growth rate. Therefore, this paper present new insights into the causative structure of the cost of consumer credit and exchange rate management as leverage for mass consumption in Africa. We rely on the mean group estimator to analyse the panel data with a sample of 37 African countries in 2008 through 2017. We found that lending and exchange rate induces positive changes in household consumption in SSA. Efficient management of the cost of consumer credit and stability of the exchange rate may significantly improve consumption in the region. Policy implications were discussed.JEl Classification: E21; E43; F31; C21; C23

scholarly journals The asymmetric effects of currency devaluation in selected sub-Saharan Africa

2021 ◽  
Vol 66 (230) ◽  
pp. 135-155
Author(s):  
Joseph Odionye ◽  
Jude Chukwu
Keyword(s):  
Exchange Rate ◽  
Sub Saharan Africa ◽  
Smooth Transition ◽  
Economic Downturn ◽  
Currency Devaluation ◽  
Asymmetric Effects ◽  
Economic Output ◽  
Sub Saharan ◽  
The Impact ◽  
Ssa Countries

Economic activities in many sub-Saharan African (SSA) countries have weakened markedly in the last few years, with deterioration in trade balances, increasing foreign reserve depletion, and exchange rate depreciation. This situation has led to a call by the International Monetary Fund for more flexible exchange rate adjustment and even currency devaluation to reverse the economic downturn. This call for devaluation has generated controversy among economists and policymakers in these countries and has revived the need to study the effects of devaluation on economic output in SSA countries. This study therefore examines the asymmetric effects of currency devaluation as a policy shift on economic output between 1980 and 2019 in six selected SSA countries, namely Ghana, Kenya, Tanzania, Mozambique, Nigeria, and Malawi. The study employs the smooth transition regression (STR) model to determine the relative asymmetric responses of economic output to devaluation and nondevaluation regimes. The results of STR are mixed, as devaluation asymmetrically impacts positively and significantly on economic output in Ghana, Kenya, Tanzania, and Mozambique, but is insignificant in the case of Nigeria and Malawi. This mixed result suggests that the impact of currency devaluation on economic output differs across countries depending on the structure and size of the economy, the nature of goods produced, and the supportive policies in place, among other things. The policy implication of the findings is that policymakers in various countries should understand the peculiarity of core macroeconomic variables in order to design and implement robust policies.

The influence of inflation targeting on the pass-through effect of the exchange rate

2018 ◽  
pp. 70-84
Author(s):  
Ph. S. Kartaev ◽  
Yu. I. Yakimova
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Policy Regime ◽  
Short And Long Term ◽  
The Exchange Rate ◽  
Pass Through ◽  
The Impact

The paper studies the impact of the transition to the inflation targeting regime on the magnitude of the pass-through effect of the exchange rate to prices. We analyze cross-country panel data on developed and developing countries. It is shown that the transition to this regime of monetary policy contributes to a significant reduction in both the short- and long-term pass-through effects. This decline is stronger in developing countries. We identify the main channels that ensure the influence of the monetary policy regime on the pass-through effect, and examine their performance. In addition, we analyze the data of time series for Russia. It was concluded that even there the transition to inflation targeting led to a decrease in the dependence of the level of inflation on fluctuations in the ruble exchange rate.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

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