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.

scholarly journals THE IMPACT OF EXCHANGE RATE ON ECONOMIC GROWTH IN ALGERIA

2019 ◽  
Vol 7 ◽  
Author(s):  
Mohammed Touitou ◽  
Yacine Laib ◽  
Ahmed Boudeghdegh
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Effective Exchange Rate ◽  
Vector Autoregressive ◽  
The Real ◽  
Effective Exchange ◽  
The Exchange Rate ◽  
Effective Exchange Rate ◽  
The Impact ◽  
Growth Economic

The transmission of changes in the exchange rate to macroeconomic performance has led to debates about their impact, particularly on growth economic. Many economists consider the exchange rate as a transmission channel of economic policy for open economies. This article focuses to determining empirically the impact of the exchange rate on economic growth. For this, we will adopt an approach in terms of the vector autoregressive model (VAR) with four variables namely, the real effective exchange rate, economic growth, financial development with credit indicators and finally the money supply. The empirical results allow us to confirm our theoretical expectations that decline in the real effective exchange rate of the dinar increases the growth economy through public spending for consumption and is stimulated by oil taxation.

scholarly journals An Analysis of the Impact of Real Effective Exchange Rate on Economic Growth of Nepal

Pravaha ◽  
2018 ◽  
Vol 24 (1) ◽  
pp. 206-216
Author(s):  
Sujan Koirala
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Money Supply ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
The Real ◽  
Real Gdp ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

This article is designed to assess the impact of real effective exchange rate (REER) on economic growth of Nepal. The study uses annual time series data for the period of 1975 to 2015. Engle- Granger residual based test and error correction model have been used to detect the impact of REER on real GDP of Nepal. The explanatory variables used in the study are real effective exchange rate, broad money supply, trade openness and gross fixed capital formation. The results of the study reveal that real effective exchange rate has positive impact on the real GDP of Nepal. Based on the findings, the study concludes that the transmission mechanism of REER through aggregate demand hold in case of Nepal and this result is compatible with the traditional approach to exchange rate. Finally, it is recommended that broad money supply continues to be relevant monetary policy for Nepal. Moreover, Nepal must use the real exchange rate as one of the macroeconomic policies. Pravaha Vol. 24, No. 1, 2018, page: 206-216 

scholarly journals Equilibrium Real Exchange Rate and Misalignment: The Sierra Leone Perspective

2021 ◽  
Vol 8 (3) ◽  
pp. 41
Author(s):  
Abu Bakarr TARAWALIE
Keyword(s):  
Exchange Rate ◽  
Sierra Leone ◽  
Government Expenditure ◽  
Unit Root Test ◽  
Real Effective Exchange Rate ◽  
The Real ◽  
Long Run ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
Long Run Equilibrium

This paper estimates the equilibrium real effective exchange rate and determine the level of exchange rate misalignment in Sierra Leone, for the period 1980 to 2018. The paper utilizes the behavioral equilibrium exchange rate methodology within the Johansen maximum likelihood framework to estimate the long run equilibrium real effective exchange rate. The unit root test result shows that all the variables are integrated of order one, whilst the cointegration test establishes the existence of one cointegrating vector as evidenced by both the Trace and Maximum Eigen Statistics. The normalized long run results reveal that openness, government expenditure and money supply were the most significant determinants of the real effective exchange rate in the long run. Furthermore, the findings reveal that the real effective exchange rate experienced sustained deviation from the long run equilibrium real effective exchange rate during the study period, with episodes of overvaluation and undervaluation. Specifically, the real effective exchange rate was overvalued by 3.69 percent during the period between 1980-1985; undervalued by 1.8 percent between 1986-1997, and overvalued by 0.9 percent between 1998-2004, Thus, the paper reveals episodes of misalignment of the real effective exchange rate. Based on these findings, the study recommends that, the monetary authorities should ensure stability of the exchange rate and maintain price stability, through sterilization of capital flows as well as contain money growth within the statutory limit.

scholarly journals Real Effective Exchange Rate and Trade Balance Adjustment

2019 ◽  
Vol 19 (131) ◽  
pp. 1 ◽  
Author(s):  
Plamen Iossifov ◽  
Xuan Fei
Keyword(s):  
Exchange Rate ◽  
Global Financial Crisis ◽  
Emerging Market ◽  
Trade Flows ◽  
Policy Implications ◽  
Real Effective Exchange Rate ◽  
The Real ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

There is an ongoing debate in the literature on whether global trade flows have become disconnected from the large real effective exchange rate movements in the wake of the global financial crisis. The question has important policy implications for the role of exchange rates in supporting growth and restoring external balance. In this paper, we use Turkey---a large and open emerging market economy that has experienced sizable swings of the real effective exchange rate---as a case study to test competing hypotheses. Our results lend support to the finding in existing cross-country studies that the real effective exchange rate remains an important determinant of trade flows. But, its effect is not symmetric in secular periods of appreciation and depreciation and is, oftentimes, dwarfed by the impact on trade flows of the income growth differential between trade partners.

scholarly journals Real Effective Exchange Rate Misalignment of the Tunisian dinar

2021 ◽  
Author(s):  
Bouzid Amaira
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Structural Adjustment ◽  
Financial Integration ◽  
Real Effective Exchange Rate ◽  
Equilibrium Exchange Rate ◽  
The Real ◽  
Effective Exchange ◽  
Trade And Exchange ◽  
Effective Exchange Rate

In the Tunisian context, the issue of the misalignment of the real exchange rate has arisen for some time for some reason, a question that has intensified after the adoption of the floating regime. In this article, we will look at the assessment of the effects, if any, of the misalignment of the real effective exchange rate (REER) to its equilibrium value over the period from 1986 to 2015. The results show that the equilibrium level of the long-run exchange rate depends on productivity, the terms of trade and government spending. Two sub-periods are noted, that of a positive mismatch (undervaluation) from 1986 to 2003 followed by another negative mismatch (overvaluation) from 2004 to 2015. Such a result can be explained by the orientation of Tunisia towards the flexibility of the real exchange rate which in turn is likely to reduce the degree of imbalance of the real exchange rate. Similarly, the Tunisian authorities must adopt gradual reforms in their decisions on liberalization and financial integration and they are called upon to strengthen their trade and exchange policies to meet the challenge of the new international financial architecture. Finally, concerning the misalignment, we found the difference between the observed exchange rate and the equilibrium exchange rate is very low, especially since the implementation of the structural adjustment plan.

scholarly journals Real Effective Exchange Rate: A Transmission Channel for the Impact of Economic Growth on Exports in Vietnam

2016 ◽  
Vol 23 (01) ◽  
pp. 121-136
Author(s):  
Hiep Nguyen Quang ◽  
Nha Nguyen Thi
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Positive Impact ◽  
Real Effective Exchange Rate ◽  
Var Model ◽  
Transmission Channel ◽  
Effective Exchange ◽  
Effective Exchange Rate ◽  
The Impact

This article analyzes the role of real effective exchange rate as a transmission channel for the impact of economic growth on Vietnam’s exports. Using quarterly data for the period of 1994–2013, the analysis results show that economic growth, real effective exchange rate (REER), and exports tend to fluctuate in the same direction. Furthermore, according to the results of the VAR model, economic growth impacts on and promotes export growth through increased productivity that improves the competitive advantage of products. The exchange rate, as an important channel, allows for a positive impact of economic growth on exports in Vietnam.

scholarly journals Does Exchange Rate Devaluation Affect Agricultural Output? Evidence from Nigeria

2018 ◽  
Vol 9 (2) ◽  
pp. 115-123 ◽  
Author(s):  
Olubukoye Opeyemi Oye ◽  
Adedoyin Isola Lawal ◽  
Ann Eneogu ◽  
Joseph IseOlorunkanmi
Keyword(s):  
Exchange Rate ◽  
Time Series Data ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
National Bureau ◽  
Causality Test ◽  
Agricultural Output ◽  
The Real ◽  
Effective Exchange ◽  
Effective Exchange Rate

The purpose of this research was to examine the effect of exchange rate devaluation on agricultural output in Nigeria. This investigation used the available time series data of 30 years (1986-2016) from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics. Moreover, the real effective exchange rate was used as the proxy for currency devaluation and Consumer Price Index (CPI) was used as a proxy for inflation. Other variables were Agricultural Gross Domestic Product (AGDP), Price of Export (PEXP), and Real Agricultural Exports (RAEXP). The research through the Augmented Dickey Fuller (ADF) and Philip Perron’s unit root tests find that the variables used in the model are integrated in the same order. Using the Johansen’s cointegration test results show that the variables are cointegrated. The results of the Vector Error Correction Model (VECM) indicates that a percent increase in the Real Effective Exchange Rate (REER), a proxy for devaluation. It will lead to a decrease in gross agricultural output. This implies that total agricultural output responds negatively to exchange rate devaluation. The result of the causality test by Toda and Yamamoto reveals that a unidirectional causality exists between real effective exchange rate and price of exports. This shows that a significant relationship exists between exchange rate devaluation and gross exports earnings. It reveals that the past values of the price of exports can be used to predict the current values of agricultural output.

Sign in / Sign up

Export Citation Format

Share Document