scholarly journals Remittance Inflows, Real Exchange Rate Movements and Sectoral Performance in Nigeria

2017 ◽  
Vol 7 (1) ◽  
pp. 78
Author(s):  
Afolabi O. Adejumo ◽  
Sylvanus I. Ikhide
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Agricultural Sector ◽  
Manufacturing Sector ◽  
Dutch Disease ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Tradable Goods ◽  
Tradable Sector ◽  
The Impact

The impact of remittance on international trade is often comparable to tariff changes—since exchange rate represents price of tradable goods. The appreciation of real exchange rate brings about increase in relative demand for competing importing tradable goods above domestic tradable goods given demand for non-tradable, since foreign goods are now cheaper in terms of domestic currency and there is high purchasing ability to do so. Resources re-allocation between tradable and non-tradable sector has been significant in Nigeria. Contribution of the agricultural sector to Nigeria’s GDP has shrunk over the years with the attendant threat to food production and loss of employment opportunities. This study investigates the linear relationship between remittances and real effective exchange rate on one hand and the impact of remittances and exchange rate on tradable and non-tradable sector in Nigeria. Employing DOLS regression technique on annual data ranging from 1981 and 2013, The study found that remittances influence performance of tradable agriculture, manufacturing sector and merchandise export sector in line with Dutch disease idea. Also, we found evidence that changes in exchange rate act as a channel of impact of Dutch disease on all sectors.

scholarly journals Trade liberalisation, competitiveness and the real exchange rate (RER): An analysis of developments in South Africa during the 1990s

2003 ◽  
Vol 6 (4) ◽  
pp. 643-665
Author(s):  
L Rangasamy ◽  
C Harmse
Keyword(s):  
South Africa ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
South African ◽  
Manufacturing Sector ◽  
Trade Liberalisation ◽  
The South ◽  
Domestic Prices ◽  
Tradable Sector ◽  
The Impact

This paper tests whether tariff liberalisation has lead to increased competitiveness in the South African economy. The 46 sectors of the South African economy are classified as exportable, importable, importable and exportable and non-tradable. The impact of trade liberalisation on domestic prices for importables and exportables is then assessed by making use of real exchange rate calculations. It is concluded that while increased globalisation of production processes in South Africa may have improved the competitiveness of the tradable sector, tariff liberalisation played a minimal role in improving competitiveness in the manufacturing sector.

scholarly journals The Effect of Trade Liberalization on Firm Entry and Exit in Punjab, Pakistan

2014 ◽  
Vol 19 (1) ◽  
pp. 67-89
Author(s):  
Marjan Nasir
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Trade Liberalization ◽  
Manufacturing Sector ◽  
Firm Entry ◽  
Entry And Exit ◽  
Export Industries ◽  
The Impact ◽  
Firm Entry And Exit ◽  
Exchange Rate Depreciation

This study focuses on the impact of trade liberalization on firm entry and exit in Punjab’s export manufacturing sector over the decade 2001–10. As far as the province’s export industries are concerned, real exchange rate depreciation attracts new firms but also leads weaker firms to exit. A reduction in local or international tariffs, however, has no significant impact on firm entry or exit.

scholarly journals A Diagnostic Test for the ‘Dutch Disease’ in the U.S.A using the ARDL Bounds Testing Technique

2019 ◽  
Vol 11 (1) ◽  
pp. 32 ◽  
Author(s):  
Kwame Asiam Addey
Keyword(s):  
Agricultural Sector ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Impulse Response Function ◽  
Dutch Disease ◽  
Bounds Testing ◽  
Negative Effects ◽  
Oil Boom ◽  
Long Run ◽  
The Impact

This study examines the impact of the most recent oil boom on North Dakota’s agricultural sector. I employ the autoregressive distributive lag (ARDL) model to examine short and long run relationships among four labor competing sectors. The model produces an optimal lag order of ARDL (6,6,6,5). Results reveal an 80% speed of adjustment coefficient. This implies that about 80% of any disequilibrium caused by a shock to the economy can be corrected within a quarter of a year. The oil sector has a negative and positive impact on the agricultural and construction sectors respectively but no significant impact on the manufacturing sector. The impulse response function (IRF) from an orthogonalized structural vector autoregression (SVAR) matrix system revealed no deviation from the boom period equilibrium agricultural GDP. Structural spending policies are recommended to curb the negative effects of another oil boom on labor competing sectors. The introduction of an agricultural wage transfer tax will also be helpful in the event of another oil boom.

The Impact of Trade Liberalization on Export Supply and Poverty in Guyana: Evidence From Cointegration Analysis

2019 ◽  
Vol 46 (3) ◽  
pp. 230-249 ◽  
Author(s):  
Nelson C. Modeste
Keyword(s):  
Exchange Rate ◽  
Trade Liberalization ◽  
Agricultural Sector ◽  
Poverty Rate ◽  
Cointegration Analysis ◽  
Real Effective Exchange Rate ◽  
Export Supply ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

Using the cointegration and error correction methodologies, this article studies the impact of trade liberalization on the supply of exports and poverty in Guyana from the early 1980s to the mid-2010s. From the empirical results of this study, two important points emerge. The first point is that, for Guyana, trade liberalization has resulted in the expansion of the country’s supply of exports and the reduction in its poverty rate. The second point is that the impact of trade liberalization on export supply and poverty has been quite small. In addition, this study finds that the real effective exchange rate and the growth of the economy along with the growth of the agricultural sector were important drivers for expanding the country’s supply of exports and reducing its poverty rate over the period covered in this study.

scholarly journals Real exchange rate behaviour and economic growth: evidence from Sierra Leone

2011 ◽  
Vol 13 (1) ◽  
pp. 8-25 ◽  
Author(s):  
Abu Tarawalie
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Sierra Leone ◽  
Real Effective Exchange Rate ◽  
Causality Test ◽  
The Real ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

The main focus of this paper is to examine the impact of the real effective exchange rate on economic growth in Sierra Leone. First an analytical framework is developed to identify the determinants of the real effective exchange rate. Using quarterly data and employing recent econometric techniques, the relationship between the real effective exchange rate and economic growth is then investigated. A bivariate Granger causality test was also employed as part of the methodology to examine the causal relationship between the real exchange rate and economic growth. The empirical results suggest that the real effective exchange rate correlates positively with economic growth, with a statistically significant coefficient. The results also indicate that monetary policy is relatively more effective than fiscal policy in the long run, and evidence of the real effective exchange rate causing economic growth was profound. In addition, the results showed that terms of trade, exchange rate devaluation, investment to GDP ratio and an excessive supply of domestic credit were the main determinants of the real exchange rate in Sierra Leone.

Testing the Hypothesis of Dutch Disease in the Bolivian Economy

2014 ◽  
pp. 93-116
Author(s):  
Sergio Cerezo Aguirre
Keyword(s):  
Exchange Rate ◽  
Natural Resources ◽  
Real Exchange Rate ◽  
Foreign Currency ◽  
Manufacturing Sector ◽  
Dutch Disease ◽  
Real Wages ◽  
Sharp Rise ◽  
The Real ◽  
Services Sector

In recent years, Bolivia has experienced a strong inflow of foreign currency due in part to a sharp rise in prices of natural resources exports. This element along with the real exchange rate appreciation has created concern about whether the economy is experiencing the so-called Dutch Disease (DD). Based on conditions described in Oomes and Kalcheva (2007) to detect this economic phenomenon (real appreciation, slower manufacturing sector growth, prompt growth of services and higher wages), this document finds no empirical evidence on this phenomenon. In particular, neither an overvalued exchange rate nor a persistent misalignment of the real exchange rate, nor a manufacturing de-industrialization is observed. The evolution of the services sector, their prices and real wages do not respond to the dynamics of a sector boom. However, the document considers that the presence of this phenomenon deserves close scrutiny.

scholarly journals The Effect of Exchange Rate Volatility on Economic Growth: Case of the CEE Countries

2020 ◽  
Vol 13 (8) ◽  
pp. 177
Author(s):  
Fatbardha Morina ◽  
Eglantina Hysa ◽  
Uğur Ergün ◽  
Mirela Panait ◽  
Marian Catalin Voica
Keyword(s):  
Economic Growth ◽  
International Trade ◽  
Exchange Rate ◽  
Fixed Effects ◽  
Exchange Rate Volatility ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Real Economy ◽  
The Exchange Rate ◽  
The Impact

The exchange rate is a key macroeconomic factor that affects international trade and the real economy of each country. The development of international trade creates conditions where volatility comes with the exchange rate. The purpose of this paper is to examine the effect of real effective exchange rate volatility on economic growth in the Central and Eastern European countries. Additionally, the effect, through three channels of influence on economic growth which vary on the measurement of exchange rate volatility, is examined. The study uses annual data for fourteen CEE countries for the period 2002–2018 to examine the nature and extends the impact of such movements on growth. The empirical findings using the fixed effects estimation for panel data reveal that the volatility of the exchange rate has a significant negative effect on real economic growth. The results appear robust with alternative measures of exchange rate volatility such as standard deviation and z-score. This paper suggests that policymakers should adopt different policies to keep the exchange rate stable in order to foster economic growth.

Diagnosing the curse of natural resources in Kuwait

2018 ◽  
Vol 34 (2) ◽  
pp. 153-171
Author(s):  
Nayef Al-Shammari ◽  
Noura Al-Hossayan ◽  
Mariam Behbehani
Keyword(s):  
Exchange Rate ◽  
Natural Resource ◽  
Inflation Rate ◽  
Resource Curse ◽  
Dutch Disease ◽  
Real Effective Exchange Rate ◽  
Content Type ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

Purpose The purpose of this paper is to empirically examine the phenomenon of natural resource curse in an oil abundant economy of Kuwait. The study estimates a behavioral equilibrium exchange rate model for Kuwait during the period 1980-2014 to assess the impact of prices and productivity factors on real effective exchange rate. Design/methodology/approach It uses time series econometric techniques, such as unit root tests, Johansen cointegration test, Vector Error Correction Model, and Impulse Response Function, to estimate the model. Findings Unlike the results of the few other studies, the empirical results show a significant impact of the variables, such as balance of trade, economic growth, oil exports, interest rate, and inflation rate, on real effective exchange rate appreciation which indicates the existence of Dutch disease within the Kuwaiti economy. Similarly, the comparative analysis between changes in public expenditure and inflation rate shows the existence of Dutch disease in Kuwait during specific periods of time. Originality/value Natural resource curse or Dutch disease is a widely recognized phenomenon affecting the balance of economic activities in natural resource abundant countries. Symptoms of Dutch disease are perceived in several changes in the economy, particularly on price level, sectorial productivity, employment, and aggregate demand which in the long run worsen the country’s economic position and lower its international competitiveness. Dutch disease is not only a feature of natural resource abundant economies, but also can affect any economy with excessive revenue generating sector or high capital inflows which appreciates country’s exchange rate. However, the examination of Dutch disease in the economy is more important when investigating the impact on oil-producing countries (Apergis et al. 2014; Mohammadi and Jahan-Parvar, 2012; Jahan-Parvar and Mohammadi, 2011). Therefore, scholars studying Dutch disease phenomenon pay greater attention to cases of Dutch disease among oil-producing countries (i.e. Arezki and Ismail, 2013; Van der Ploeg and Venables, 2013; Jahan-Parvar, 2012; Cologni and Manera, 2013).

Remittances and Real Effective Exchange Rate

2018 ◽  
Vol 19 (1) ◽  
pp. 124-136 ◽  
Author(s):  
Ujjal Protim Dutta ◽  
Partha Pratim Sengupta
Keyword(s):  
Exchange Rate ◽  
Real Effective Exchange Rate ◽  
Annual Data ◽  
Long Run ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate ◽  
The Impact ◽  
Bound Test ◽  
Ardl Bound Test

Remittances in India have been growing rapidly since 1991. Most of the studies find that remittance has had a significant impact on real effective exchange rate (REER). It is imperative to evaluate the impact of a transfer such as remittance and aid on country’s competitiveness. This article is an attempt to investigate the impact of workers’ remittances and some selected macro-variables on REER of India using annual data from 1980–2015. The study conducted autoregressive distributive lag (ARDL) bound test co-integration approach to explore this long-run relationship. The ARDL bound test approach confirms significant long-run relationships among the selected variables at 1 per cent level of significance. In addition to this, the ARDL short-run error correction model implies that while REER may temporarily deviate from its long-run equilibrium, the deviations adjust towards the equilibrium level in the long run. JEL: F31, F35, F41

Exchange rate misalignment and economic growth in India

2017 ◽  
Vol 9 (4) ◽  
pp. 414-434
Author(s):  
Vaseem Akram ◽  
Badri Narayan Rath
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Structural Break ◽  
Annual Data ◽  
Content Type ◽  
Distributed Lag ◽  
Exchange Rate Misalignment ◽  
The Exchange Rate ◽  
The Impact

Purpose The purpose of the paper is to examine the impact of exchange rate misalignment on economic growth in India using annual data from 1980 to 2014. Design/methodology/approach First, misalignment is measured, which is defined as the deviations of the actual real exchange rate (RER) from its equilibrium level. The equilibrium real exchange rate (ERER) is estimated using the auto-regressive distributed lag (ARDL) model by considering key macroeconomic fundamentals of the determinants of RER. Zivot and Andrews’ unit root with structural break is used to test the stationarity property of data. The impact of exchange rate misalignment on economic growth has been examined using ARDL and variance decomposition techniques. Findings Our results find an overvaluation of the exchange rate till 2000, and thereafter, an undervaluation of the exchange rate prevails in India. Further, the result indicates that an increase in exchange rate misalignment leads to a decrease in economic growth and vice versa. Moreover, a positive misalignment (overvaluation) hurts the economic growth and a negative misalignment (undervaluation) promotes the economic growth. Research limitations/implications From the policy perspective, the results highlight that India needs to maintain an appropriate exchange rate which can reduce the RER misalignment. It is better for the Reserve Bank of India (RBI)’s intervention to smoothen the fluctuations of the exchange rate to avoid the inefficiency in the allocation of resources. However, to minimize the RER misalignment, the intervention should be conducted only in the short run. Originality/value The study contributes to the existing literature by estimating the exchange rate misalignment for India and its impact on economic growth.

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