The relationship between international trade and exchange rate variability: A review study

The paper was conducted to survey and review the effects of exchange rate volatility on trade performance. Since the last review articles by McKenzie and Bahmani-Oskooe and Hegerty, the literature has experienced a surge in the number of articles. Many of the recent studies have been empirical in nature and these deserve specific attention. There is often more than one measure of volatility applied in a study, and some new measures of exchange rate volatility are introduced. Although there are relatively new econometric models being applied in this research area, the determinants of trade performance in recent studies are simple. In addition, the number of studies using bilateral trade data levels has increased over time. Although a large number of studies are reviewed in this study, existing empirical evidence on the trade effects of exchange rate volatility is generally inconclusive. These new contributions set the stage for this review.

Reserve Volatility and the Identification of Exchange Rate Regimes

Should exchange rate regime classifications be based purely on some measure of exchange rate flexibility, or should such flexibility be judged in proportion to the degree of exchange market pressure (EMP), as reflected in the behaviour of international reserves? Some authors have claimed that the best approach to classifying exchange rate regimes is to estimate to what extent EMP is absorbed in reserve variability rather than exchange rate variability. Empirical evidence is presented on the variability of reserves and exchange rates for 193 countries from 1980 to 2019. Pegged regimes do not display any more reserve volatility than floats. In most regimes there is a small but statistically significant positive correlation between reserve accumulation and exchange rate appreciation in monthly data, but this effect is no stronger in less flexible regimes, where intervention is expected to be greater. A flexibility index is constructed, based on the ratio of exchange rate flexibility to reserve volatility, and is compared to one based solely on exchange rate flexibility by investigating its conformity with the IMF de facto classification. The flexibility index that takes reserves into account does not improve the identification of pegs, but it helps to a limited extent to distinguish free floats from managed floats.

Financial Risk and Adoption of Public-Private Partnerships in Kenyan Public Universities

Employment of public-private partnerships as a way of delivery of public utilities has been on the rise in the recent past. This has been driven by a number of factors, key among them being the ability of the public entity to transfer financial risk to private sector players who are better placed to mitigate such risks. The study purposed to assess the effect of financial risk on adoption of public-private partnerships in Kenyan public universities. The specific study objectives were to evaluate the influence of interest rate variability, revenue streams variability and exchange rate variability on adoption of public-private partnerships. The study employed a descriptive research design while targeting a population of 223 comprising of purposively selected employees from nine public universities. A sample size of 143 was used from whom data was collected using structured questionnaire. Data analysis employed use of both descriptive and inferential statistics. The results obtained show that interest rate variability, revenue stream variability and exchange rate variability have a statistically significant influence on adoption of public-private partnerships. On the basis of the study findings it was concluded that financial risk transfer had a significant positive influence on adoption of public-private partnerships in Kenyan public universities. It is therefore recommended that Kenyan public universities should thoroughly evaluate financial risk involved in any project before entering into public-private partnership arrangement in order to enhance value for money.

Ms Exchange Rate Variability and Macroeconomic Variables: A Comparative Analysis of Regional, Sub-Regional, Developed and Developing Countries

Key results of this research are that the study proposed seven hypothesis against all seven macroeconomic variables (Real Growth, Price Inflation, Government Consumption, Private Consumption, Investment, Export and Import) of Exchange Rate and results indicated there are a positive relationship and strong association of short-term and long-term between Exchange Rate and its Macroeconomic variables providing satisfactory results as all research objectives were met and research questions were answered. A research philosophy was derived from the results that Exchange Rate Variability will continuously and indefinitely will occur and Price Inflation of a Nation will determine its fluctuations.

The Influence of Oil Price Volatility on Selected Macroeconomic Variables in Nigeria

The paper analyses the influence of oil price volatility on Exchange Rate Variability, External Reserves, Government Expenditure and real Gross Domestic Product using the methodology of Vector Auto-Regressive (VAR) to carry out regression analysis, impulse response function and factor error variance decomposition for robust policy recommendations. The results of the research show that unstable oil price exerts varying degrees of deleterious effect on exchange rate variability, external reserves, Government expenditure and real gross domestic product (GDP). Based on the findings of the study, we recommend the need for the country to branch out its revenue sources. This will further shield the dangle effect of the fluctuation in prices of oil. Serious policy attention should be attached to agricultural reformation, industrial policy drives, mines and mineral development to diversify Nigeria’s economy following the downward slide in the oscillations in oil prices to address the problem of excessive dependence on crude oil exportation. This will help to achieve sustainable growth and development in Nigeria.

FLEKSIBILITAS NILAI TUKAR DAN PENYESUAIAN TRANSAKSI BERJALAN DI INDONESIA: ANALISIS THRESHOLD VAR

Estimation study about the relationship between exchange rate flexibility and current account adjustment has been through three stages, the first stage was analysis of correlation among exchange rates variability (proxied by REER and NEER) and exchange rate regimes classification. The second step was estimating the relationship that the former was mentioned with VAR as benchmark model. The third step was applying the nonlinear estimation with Threshold VAR. The results of analysis showed that exchange rate regime classification may not capture actual exchange rate variability and flexibility exchange rate can accelerate current account adjustment in Indonesia if the changes of Indonesia exchange rate less than 27.7059 (low regime) whereas in high regime exchange rate is persistent increasing so that the system between exchange rate and current account become unstable. Bank Indonesia as monetary authorities must keep the changes of exchange rate less than 27.7059, due to exchange rate can affect current account adjustment, so can anticipate if there is current account deficit in Indonesia economy. Keywords : Exchange Rate Flexibility, Current Account Adjustment, Exchange Rate Regime, Classification, Threshold VAR

FLEKSIBILITAS NILAI TUKAR DAN PENYESUAIAN TRANSAKSI BERJALAN DI INDONESIA: ANALISIS THRESHOLD VAR

Estimation study about the relationship between exchange rate flexibility and current account adjustment has been through three stages, the first stage was analysis of correlation among exchange rates variability (proxied by REER and NEER) and exchange rate regimes classification. The second step was estimating the relationship that the former was mentioned with VAR as benchmark model. The third step was applying the nonlinear estimation with Threshold VAR. The results of analysis showed that exchange rate regime classification may not capture actual exchange rate variability and flexibility exchange rate can accelerate current account adjustment in Indonesia if the changes of Indonesia exchange rate less than 27.7059 (low regime) whereas in high regime exchange rate is persistent increasing so that the system between exchange rate and current account become unstable. Bank Indonesia as monetary authorities must keep the changes of exchange rate less than 27.7059, due to exchange rate can affect current account adjustment, so can anticipate if there is current account deficit in Indonesia economy. Keywords : Exchange Rate Flexibility, Current Account Adjustment, Exchange Rate Regime, Classification, Threshold VAR