Factors Determining Real Exchange Rate Change in South Africa

1988 ◽  
Vol 56 (2-3) ◽  
pp. 76-83
Author(s):  
J GERSON ◽  
S. B. KAHN
Keyword(s):  
South Africa ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Rate Change ◽  
Exchange Rate Change

scholarly journals Pengaruh Perubahan Nilai Tukar Rupiah Terhadap Neraca Transaksi Berjalan Indonesia, Periode 1990.I – 2004.II (Kasus Indonesia - Amerika Serikat)

2007 ◽  
Vol 8 (3) ◽  
pp. 1-21 ◽  
Author(s):  
Arintoko Arintoko ◽  
Faried Wijaya
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Current Account ◽  
Theoretical Explanation ◽  
Rate Change ◽  
Exchange Rate Change ◽  
Empirical Results ◽  
Real Gdp ◽  
J Curve ◽  
Curve Theory

This research investigates the effects of exchange rate change on the relative current account and real GDP in Indonesia to US. This research provides time series evidence for the period of first quarter of 1990 to second quarter of 2004 under flexibel exchange rate regimes. The analysis is based on a J-Curve theory. First, this research employs unit root, cointegration and Granger causality tests and summarizes the relationships between real exchange rate, the current account, and real GDP. Second, the standard theoretical explanation of the JCurve effect is used to motivate a vector autoregression(VAR) and error correction mechanism(ECM) analysis of real exchange rate change on the relative current account, and real GDP for Indonesia to US. This research finds weak evidence of a J-Curve for the Indonesia current account, in fact these empirical results reject the J-Curve hypothesis. The empirical study finds little evidence that a currency depreciation causes a current account deficits in the short run in Indonesia-US bilateral data and no evidence of a reliable long run effect of exchange rate change on the current account. Interestingly, empirical results show that these evidence are not consistent with the standard theoretical explanation of the J-Curve. Consequently, these empirical results pose a strong challenge for international economic theory and policy.Keywords: exchange rate change, current account, real GDP, and J-Curve theory

Commodity prices, the exchange rate and manufacturing in South Africa: what do the data say?

2015 ◽  
Vol 6 (4) ◽  
pp. 356-379 ◽  
Author(s):  
Duncan Hodge
Keyword(s):  
South Africa ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Money Supply ◽  
Positive Relationship ◽  
Commodity Prices ◽  
Dutch Disease ◽  
Content Type ◽  
Labour Costs ◽  
Unit Labour Costs

Purpose – The purpose of this paper is to investigate the empirical relationships between changes in OECD output, commodity prices, the real exchange rate, real money supply, unit labour costs and manufacturing in South Africa. In particular, to test a version of the Dutch disease argument that increases in the prices of South Africa’s main commodity exports have had a negative effect on domestic manufacturing against the alternative hypothesis that there is a positive relationship between such changes in commodity prices and domestic manufacturing output. Design/methodology/approach – Construction of a model including real manufacturing output in South Africa as the dependent variable and the following independent variables: OECD output, an international real metals price index, a real effective exchange rate index, real M3 money supply and manufacturing unit labour costs. The time series sample data comprise 124 quarterly observations for the period 1980-2010. The model equation was tested and estimated using a Johansen cointegration approach. Findings – The main findings are: OECD output is the single most important determinant of domestic manufacturing output; while the real exchange rate has the predicted negative sign, rising commodity prices are associated with increases rather than decreases in domestic manufacturing and; large increases in unit labour costs since the early 1980s have dragged down manufacturing over the sample period. Originality/value – The finding of a positive relationship between commodity prices and domestic manufacturing means that the Dutch disease argument must be revised when applied to South Africa. While rising commodity prices may lead to a negative exchange rate effect on manufacturing competitiveness, this is more than offset by the positive growth effects associated with upswings in the commodity price cycle.

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