How Does Activity in Manufacturing Sector Respond to Trade and Exchange Rate Shocks? Evidence from Trade-Openness and Import Penetration Thresholds

2020 ◽  
pp. 105-120
Author(s):  
Nombulelo Gumata ◽  
Eliphas Ndou
Keyword(s):  
Exchange Rate ◽  
Manufacturing Sector ◽  
Trade Openness ◽  
Import Penetration ◽  
Trade And Exchange ◽  
Exchange Rate Shocks

Exchange Rate Regime Preferences and Budget Deficits in Open Economies

2021 ◽  
pp. 65-89
Author(s):  
Mustafa Kiziltan
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Trade Openness ◽  
Open Economies ◽  
Demographic Factors ◽  
Generalized Least Squares ◽  
Budget Deficits ◽  
Fiscal Discipline ◽  
Exchange Rate Shocks ◽  
High Level

This study investigates the impacts of exchange rate regime (ERR) choice, economic, institutional, and demographic factors on the budget deficit. The recent literature states that fiscal discipline is affected by the ERR preferences in open economies. In this study, the effect of de facto ERR preferences on fiscal discipline were analyzed between 1995 and 2016 for 76 countries classified into income groups. The estimates by Feasible Generalized Least Squares and Panel Corrected Standard Errors estimators show that flexible ERRs provide much more fiscal discipline. The findings highlight the importance of institutional quality, demographic factors, and inflation to ensure fiscal discipline. A country with a high level of trade openness is more vulnerable to exchange rate shocks, which leads to uncertainty in the fiscal policy. The results confirm that ERR preferences affect countries' fiscal disciplines differently, depending on the countries' characteristics.

scholarly journals Effects of Foreign Exchange Crisis on the Performance of Manufacturing Sector in Nigeria

2021 ◽  
pp. 1-7
Author(s):  
Dr. Marshal Iwedi
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Foreign Exchange ◽  
Direct Investment ◽  
Manufacturing Sector ◽  
Trade Openness ◽  
Exchange Rate Policy ◽  
Least Square ◽  
Explanatory Variables ◽  
Level Of Significance

The study examined the effect of foreign exchange crisis on the performance of manufacturing sector in Nigeria over the period of 35 years ranging from 1985 to 2019. The study proxy foreign exchange crisis by exchange rate of U.S to Nigeria, trade openness and foreign direct investment while performance of manufacturing sector was measured by manufacturing sector gross domestic product. Time series were used and sourced from central bank of Nigeria statistical bulletin for 2019. Ordinary least square (OLS) technique of regression was used to analyze the data. The R-square, T-statistics and F-statistics were used to determine the extents to which the explanatory variables affect the explained variable. The hypotheses formulated were tested at 5% level of significance using t-test. The results reveal that foreign exchange rate has a negative and significant effect on manufacturing sector GDP in Nigeria. Trade openness has a positive and significant effect on manufacturing sector performance while foreign direct investment has a positive and significant effect on manufacturing sector GDP in Nigeria. The study concluded that foreign exchange crisis plays a significant negative role in the performance of manufacturing sector in Nigeria. The study recommended that there should be pursuance of sustainable and stable exchange rate policy and to put in place, measures that will promote greater exchange rate stability.

scholarly journals External Sector and The Nigerian Manufacturing Sector Performance, 1981-2019

2022 ◽  
Vol 05 (01) ◽  
Author(s):  
Leera Kpagih ◽  
Keyword(s):  
Exchange Rate ◽  
Manufacturing Sector ◽  
Trade Openness ◽  
Environment Impact ◽  
Ardl Model ◽  
Long Run ◽  
Short Run ◽  
Sector Performance ◽  
External Sector ◽  
Exchange Rate Level

No country is an island. The globalization phenomenon is making all countries to be interdependent. The external sector environment has become critical for the success of every country and internal balance. Thus, it has become important to examine how much the externa sector environment impact on the performance of the domestic economy. The present study, therefore, examined the influence of Nigerian external sector environment on the performance of the Nigerian manufacturing sector between 1981 and 2019. The study adopted exp-post research design approach and the Autoregressive Distributed Lag (ARDL) model estimation techniques. The empirical model consists of the Nigerian manufacturing sector output index as the dependent variable and exchange rate, trade openness, and foreign direct investment as independent variables and external sector environment variables. Test of unit root results indicated that the variables have mix order of integration, while the co integration analysis results indicated that the variables in the model have stable long run relationship. Estimate of the ARDL model reveals that in the short run exchange rate variations have negative, but significant effect on manufacturing sector performance, while trade openness, and FDI have positive but insignificant influence on the manufacturing sector performance in the short run. In the long run, exchange rate level and FDI inflows have positive and significant effect on the manufacturing sector performance, while trade openness has negative and significant effect on the Nigerian manufacturing sector performance. The study therefore conclude that the Nigerian external sector Environment has significant influence on the performance of the Nigerian manufacturing sector.

Non-linear causality between exchange rates, inflation, interest rate differential and terms of trade in Tunisia

2018 ◽  
Vol 9 (3) ◽  
pp. 274-289 ◽  
Author(s):  
Fahima Charef ◽  
Fethi Ayachi
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Parametric Method ◽  
Trade Openness ◽  
Terms Of Trade ◽  
Content Type ◽  
Dynamic Relationship ◽  
Bidirectional Relationship ◽  
Non Linear ◽  
Trade And Exchange

PurposeThe purpose of this paper is to investigate the dynamic relationship between inflation, interest rate differential, the exchange trade and exchange rate parities, i.e. (USD/TND, EUR/TND and JPY/TND).Design/methodology/approachGiven the existing non-linear form between the different time series in this study, the empirical analysis is based on the using of non-parametric method such as the artificial neural networks. In order to detect the causality relationship between the variables, the authors use an NARX model.FindingsMixed results were found; there is a bidirectional relationship between inflation and exchange rate among others. Results also show that there is a strong correlation between the terms of trade and inflation, which says that trade openness increases the demand for imported goods and, therefore, causes more inflation for Tunisia.Originality/valueAfter these results, it is important for policymakers to know which factors influence exchange rate stability, especially in developing countries like Tunisia.

scholarly journals THE IMPACT OF TRADE OPENNESS ON MANUFACTURING SECTOR PERFORMANCE

2021 ◽  
Vol 3 (Number 1) ◽  
pp. 12-22
Author(s):  
Sun Fu Neoh ◽  
Tian So Lai
Keyword(s):  
Exchange Rate ◽  
Manufacturing Sector ◽  
Trade Openness ◽  
Dynamic Effect ◽  
Percentage Change ◽  
Series Data ◽  
Lending Rate ◽  
Production Growth ◽  
Sector Performance ◽  
The Impact

Trade openness plays a vital role in boosting the production of the manufacturing sector. Two opposing perspectives identify trade-growth nexus. One posits that trade openness will stifle industrial productivity while the opposing view believes that manufacturing productivity can be enhanced by a trade liberalization regime. This study investigates the instantaneous and jointly dynamic effect of trade openness along with macroeconomic variables (i.e., Malaysian exchange rate and average lending rate) and the event of economic crises on manufacturing sector performance in Malaysia using data from 1981 to 2016. This study employed a distributed lag model. The Augmented Dickey-Fuller (ADF) unit root test was adopted to determine the stationarity of time series data. The empirical results revealed that the effect of both instantaneous and the jointly dynamic effect of the percentage change in trade openness on manufacturing production growth in Malaysia are positive and significant. However, the effects of the percentage change in exchange rate and percentage change in average lending rate are insignificant. Economic crisis has a significant negative impact on Malaysian manufacturing production growth. Therefore, the results strongly recommend that the direction of trade policy in Malaysia should be formulated based on outward-looking strategies.

scholarly journals ICT and its Impact on the Financial Development of the Banking System

2021 ◽  
pp. 8-14
Author(s):  
Arash Ketabforoush Badri
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Foreign Exchange ◽  
Direct Investment ◽  
Manufacturing Sector ◽  
Trade Openness ◽  
Banking System ◽  
Exchange Rate Policy ◽  
Least Square ◽  
Explanatory Variables

The study examined the effect of foreign exchange crisis on the performance of manufacturing sector in Nigeria over the period of 35 years ranging from 1985 to 2019. The study proxy foreign exchange crisis by exchange rate of U.S to Nigeria, trade openness and foreign direct investment while performance of manufacturing sector was measured by manufacturing sector gross domestic product. Time series were used and sourced from central bank of Nigeria statistical bulletin for 2019. Ordinary least square (OLS) technique of regression was used to analyze the data. The R-square, T-statistics and F-statistics were used to determine the extents to which the explanatory variables affect the explained variable. The hypotheses formulated were tested at 5% level of significance using t-test. The results reveal that foreign exchange rate has a negative and significant effect on manufacturing sector GDP in Nigeria. Trade openness has a positive and significant effect on manufacturing sector performance while foreign direct investment has a positive and significant effect on manufacturing sector GDP in Nigeria. The study concluded that foreign exchange crisis plays a significant negative role in the performance of manufacturing sector in Nigeria. The study recommended that there should be pursuance of sustainable and stable exchange rate policy and to put in place, measures that will promote greater exchange rate stability.

scholarly journals Determinants and Sustainability of Manufacturing Sector Performance in Nigeria: The Roles of Selected Macroeconomic Variables

2021 ◽  
Vol 7 (2) ◽  
pp. 31
Author(s):  
Falade Abidemi Olufemi Olusegun
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Real Exchange Rate ◽  
Money Supply ◽  
Manufacturing Sector ◽  
Trade Openness ◽  
Exchange Rate Policy ◽  
Market Force ◽  
Tax Rate ◽  
Sector Performance

Manufacturing sector is a vibrant sector that spurs growth in every other sector of the economy. Despite this, macroeconomic environment in the country has not made this desire materialized. Therefore, the study examined the determinants and sustainability of manufacturing sector performance in Nigeria from 1994-2019. The data used include manufacturing sector output, interest rate, real exchange rate, tax rate, money supply and trade openness. Also, Error Correction Model (ECM) and Pairwise Granger Causality(PGC) techniques were used for the formulated objective. The unit root test confirmed stationarity of interest rate at level; while other were integrated of order one (D = 1). The Johansen co-integration established a long-run relationships. The ECM corrected the disequilibrium at an annual rate of 77.5%. Also, real exchange rate, tax rate and trade openness had a direct and significant effect on manufacturing sector output. While, interest rate and money supply were non-significance. The PGC result revealed a bi-directional causality between real exchange rate and manufacturing sector and tax rate and manufacturing sector output. It was concluded that increase in consumption tax, real exchange rate and liberation of the economy were the determinants of manufacturing sector performance, while appreciation of nigeria’s currency (naira) and increase in tax rate with proportional improvement in infrastructural facilities are needed to sustain it. Therefore, recommended that the financial institutions especially the apex bank should eliminate different bench-mark of exchange rate policy by allowing the market force of demand and supply to depict the real value of naira.

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