This study investigated the relationship between premium exchange rate and output growth in
African oil producing countries between 1995 to 2018 using panel Vector Error Correction as estimation
technique Data for the study were sourced from World Bank Development indicator data base, IMF online data
base and Central Banks of the selected countries
The main purpose of this study is to investigate the validity of Marshall-Lerner condition and the existence of J curve for the Turkish economy. Because of transition to the floating exchange rate regime in 2001, the analyzing period has been chosen as 2003-2016 to use monthly data for the related variables. After conducting unit- root and cointegration tests, the estimated VECM results show that Marshall- Lerner condition holds for the Turkish case. On the other hand, estimated VECM produces impulse- response functions that prove the existence of J curve for the Turkish economy in the long run.
American Journal of Multidisciplinary Research and Development is indexed, refereed and peer-reviewed journal, which is designed to publish research articles.
After the fall of Bretton Woods System, exchange rates become the focus of researchers and politicians. When a floating exchange rate system was started researchers investigated the impact of exchange rate volatility on international trade but the development of derivative instruments changed the researchers focus from currency volatility towards the impact of currency appreciation or depreciation on international trade. The main objective of this research was to investigate the short run and long run relationship between Turkey’s merchandise trade deficit and real effective exchange rate. The monthly data was collected from Central Bank of Republic of Turkey from March 2005 to September 2017. Autoregressive distributed lag (ARDL) approach and Error correction model (ECM) was used for the analysis. The finding shows that the variables have long run relationship but it is not significant at 5% significance level. The short run model also shows the insignificant results. These findings have the following policy implication: Turkey cannot improve the merchandise trade deficit by devaluating its currency.
The main purpose of this study is to investigate the validity of Marshall-Lerner condition and the existence of J curve for the Turkish economy. Because of transition to the floating exchange rate regime in 2001, the analyzing period has been chosen as 2003-2016 to use monthly data for the related variables. After conducting unit- root and cointegration tests, the estimated VECM results show that Marshall- Lerner condition holds for the Turkish case. On the other hand, estimated VECM produces impulse- response functions that prove the existence of J curve for the Turkish economy in the long run.
American Journal of Multidisciplinary Research and Development is indexed, refereed and peer-reviewed journal, which is designed to publish research articles.
After the fall of Bretton Woods System, exchange rates become the focus of researchers and politicians. When a floating exchange rate system was started researchers investigated the impact of exchange rate volatility on international trade but the development of derivative instruments changed the researchers focus from currency volatility towards the impact of currency appreciation or depreciation on international trade. The main objective of this research was to investigate the short run and long run relationship between Turkey’s merchandise trade deficit and real effective exchange rate. The monthly data was collected from Central Bank of Republic of Turkey from March 2005 to September 2017. Autoregressive distributed lag (ARDL) approach and Error correction model (ECM) was used for the analysis. The finding shows that the variables have long run relationship but it is not significant at 5% significance level. The short run model also shows the insignificant results. These findings have the following policy implication: Turkey cannot improve the merchandise trade deficit by devaluating its currency.
A Dynamic Analysis of the Impact of Capital Flight on Real Exchange Rate in N...iosrjce
This study examines the dynamic effect of capital flight on the real exchange rate of the naira.
Specifically this study seeks to investigate if a long-run relationship exists between real exchange rate and
capital flight in Nigeria. This will be done using quarterly time series data covering the period 1981 to 2009. In
this process the short-run dynamics of the interactions between the two variables will be analyzed.
This paper provides an overview of inflation developments in Vietnam in the years following the doi moi reforms, and uses empirical analysis to answer two key questions: (i)
what are the key drivers of inflation in Vietnam, and what role does monetary policy play? and (ii) why has inflation in Vietnam been persistently higher than in most other emerging market economies in the region? It focuses on understanding the monetary policy transmission mechanism in Vietnam, and in understanding the extent to which monetary policy can explain why inflation in Vietnam has been higher than in other Asian emerging markets over the past decade.
The objective of this study is to identify the determinants of inflation in West Africa, mainly in the WAEMU zone, in order to contribute to improving the conduct of monetary policy. The equation of the exchange of the Quantitative Theory of the Currency and the generalized method of moments (MMG) in dynamic panel is used. Annual data concerning six countries in West Africa and range from 1991 to 2015. The results of the estimation show that in addition to the economic growth rate and the money supply, the devaluation has a significant effect on inflation. As we can see, inflation is not systematically a monetary phenomenon in West Africa. The authorities must therefore seek to determine the optimal threshold for the rate of increase of the money supply.
This year's SITE Energy Day was devoted to discussing the consequences of oil price fluctuations for markets and actors of the economy. The half-day conference engaged policy-oriented scholars and experts from the business community to discuss the impact of oil price fluctuations on macro fundamentals, international trade, strategies of oil cartels, strategic risk management, and opportunities for change in energy systems.
Natalya Volchkova, Policy Director of CEFIR, presented a topic "Oil price fluctuations and international trade".
For more information and research analysis please visit: www.hhs.se/site
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Oil has for decades been perceived as a necessary and highly addictive energy commodity, fueling the world economy. It is a crucial input good for most of the net-oil consumer countries, and it is an important source of revenue for the net-oil supplier countries. This means that any changes in the oil price will affect the entire world economy. Chloé Le Coq and Zorica Trkulja from Stockholm Institute of Transition Economics have written a policy brief that explains to what extent the oil-price fluctuations matter for the economy.
Read more: https://www.hhs.se/site
Developing economies are different than developed economies in many aspects, i.e., in terms of institutional framework and political situation etc. Thus, the monetary policy needed in developing countries is also different than developed countries. The goal of this study is to investigate exchange rate channel of monetary transmission mechanism in a developing country’s setup. The variables included in our analysis are interest rate, exchange rate, exports, consumer price index and gross domestic product. Johansen cointegration technique is applied to analyze the long run relationship among variables while multivariate VECM granger causality test is used to explore the direction of causality among the set of our variables. We use annual data ranging from 1980 to 2015 while taking account of the limitations of time series data. Our findings suggest that output has a negative long run relationship with exchange rate and interest rate, positive relationship with exports and no statistically significant relationship with inflation. Interest rate granger causes all four of our variables thus showing the power of this policy tool. Exchange rate causes exports, consumer price index and output which means exchange rate is the second most powerful variable in our analysis. Output is granger caused by interest rate, exports and exchange rate which confirms the sensitivity of output to these variables. Consumer price index is granger caused by all four of our variables and came out to be the most sensitive variable in our analysis.
The study gauged the influence of exchange rate fluctuations on the Performance of the Nigerian Economy over the time from of 1986 to 2016, utilizing secondary data tracked from the statistical report of the Apex Nigerian bank, and utilizing techniques such as Unit root test, Generalized autoregressive conditional heteroscedasticity (GARCH), Impulse-Response Output and Variance-Decomposition Test to evaluate variables such as Interest rate, inflation rate, exchange rate against a sole indicator of Economic Performance I.e. Gross Domestic Product Growth rate (GDPGR), it was discovered that despite the short run influx of the spill over volatility of Interest rate and inflation rate, there exist no long run volatility influence of interest rate on Economic Performance in Nigeria. It was therefore recommended that the apex financial institution and relevant policy makers should ensure an interest rate system and status that could stimulate growth or production and the nation should endeavour to utilize her interest rate in controlling its output level as it motivates Economic Performance (GDPGR).
Russia’s dependence on oil and other natural resources is well known, but what does it actually mean for policy makers’ ability to control the economic fate of the country? This brief provides a more precise analysis of the depth of Russia’s oil dependence. This is based on a careful statistical analysis of the immediate correlation between international oil prices — that Russia does not control — and Russian GDP, which policy makers would like to control. I then look at how IMF’s forecast errors in oil prices spillover to forecast errors of Russian GDP. These numerical exercises are striking; over the last 25 years oil price changes explain on average two thirds of the variation in Russian GDP growth and in the last 15 years up to 80 percent of the one-year ahead forecast errors. Instead of controlling the economic fate of the country, the best policy makers can hope for is to dampen the short-run impact of oil price shocks. A flexible exchange rate and fiscal reserves are key volatility dampers, but not sufficient to protect long-term growth. The latter will always require serious structural reforms and the question is what needs to happen for policy makers to take action to get control over the long-term fate of the economy.
Komonditi Export Mining Sector Analysis of Southeast Sulawesitheijes
The International Journal of Engineering & Science is aimed at providing a platform for researchers, engineers, scientists, or educators to publish their original research results, to exchange new ideas, to disseminate information in innovative designs, engineering experiences and technological skills. It is also the Journal's objective to promote engineering and technology education. All papers submitted to the Journal will be blind peer-reviewed. Only original articles will be published.
Pattern and Determinants of Export Diversification in BangladeshMd. Moulude Hossain
This paper analyzes the pattern and the main determinants of
export diversification in Bangladesh. A large data set of Bangladesh export during the period of 1980-81 to 2006-07 has been used for this purpose. Three main indexes have been used to explore the trend of export concentration and these three indicators of export diversification were calculated to determine the trend of export from Bangladesh. The
Hirschman Index, the Ogive Index and the Entropy Coefficient were used to analyze the diversification pattern of export from Bangladesh. From the analyses, robust evidence has been found across the specifications and indicators that the export basket of Bangladesh has continued to remain relatively undiversified and the country has not been able to translate its
comparative advantage into competitive advantage. Further, this study reveals that the export growth and overall economic growth are highly correlated and a robust restructuring in trade policy is needed for gaining momentum in diversification of export in Bangladesh. The analyses show that exports at the intensive margin account for the most important share of
overall trade growth. At the extensive margin, geographic diversification is more important than product diversification, especially for developing countries. Taking part in free trade agreements, thereby reducing trade barrier and costs, development of infrastructure and communication, extensive financing for export and policies emphasizing the development of human capital is now the need of time for improving diversification of export.
Globalization and liberalization puts the emphasis on exports as a technique in which developing countries like the Kingdom of Eswatini should adopt to expand their markets beyond their domestic market. For the developing countries to be international competitive in the global markets they need to minimize their production cost particularly on the products that are being exported. The production of most of the exported commodities needs lot energy from oil; hence there has been tremendous increase of oil and its by-product worldwide. The current oil demand for most countries in the world is not met because of insufficient reserves for crude oil in most countries. The Kingdom of Eswatini does not have an oil reserves or oil-refining facilities hence they depends on imports from the neighbouring states in order to meet the consumption requirement. The oil price shocks in the global market normally have adversely effects on various macroeconomic variables such as exchange rate since the oil is traded in US dollars. Oil and exchange rate are considered to be essential factors for domestic economies for developing countries like the Kingdom of Eswatini. The purpose of the study is to investigate the causal relationship between Lilangeni-dollar exchange rate and crude oil price by using the Toda-Yamamota approach. The study used daily time series from January 01st, 2005 to April 30th, 2018 of nominal exchange rate of Lilangeni (Eswatini currency [SZL]) vis-à-vis United States dollar (USD) data as well as the global price of Brent crude oil data that was used as a proxy for the Global crude oil price. The results from the Toda-Yamamoto Granger causality test revealed that there is a unidirectional causality from the global oil price to the Eswatini’s nominal exchange rate (SZL/USD). Hence the study concluded that the global crude oil price influence the Eswatini’s nominal exchange rate. Therefore the study recommends that in the formulating of Eswatini’s exchange rate policy emphases should be on the global oil prices in order not to misalign the Eswatini’s currency.
A Dynamic Analysis of the Impact of Capital Flight on Real Exchange Rate in N...iosrjce
This study examines the dynamic effect of capital flight on the real exchange rate of the naira.
Specifically this study seeks to investigate if a long-run relationship exists between real exchange rate and
capital flight in Nigeria. This will be done using quarterly time series data covering the period 1981 to 2009. In
this process the short-run dynamics of the interactions between the two variables will be analyzed.
This paper provides an overview of inflation developments in Vietnam in the years following the doi moi reforms, and uses empirical analysis to answer two key questions: (i)
what are the key drivers of inflation in Vietnam, and what role does monetary policy play? and (ii) why has inflation in Vietnam been persistently higher than in most other emerging market economies in the region? It focuses on understanding the monetary policy transmission mechanism in Vietnam, and in understanding the extent to which monetary policy can explain why inflation in Vietnam has been higher than in other Asian emerging markets over the past decade.
The objective of this study is to identify the determinants of inflation in West Africa, mainly in the WAEMU zone, in order to contribute to improving the conduct of monetary policy. The equation of the exchange of the Quantitative Theory of the Currency and the generalized method of moments (MMG) in dynamic panel is used. Annual data concerning six countries in West Africa and range from 1991 to 2015. The results of the estimation show that in addition to the economic growth rate and the money supply, the devaluation has a significant effect on inflation. As we can see, inflation is not systematically a monetary phenomenon in West Africa. The authorities must therefore seek to determine the optimal threshold for the rate of increase of the money supply.
This year's SITE Energy Day was devoted to discussing the consequences of oil price fluctuations for markets and actors of the economy. The half-day conference engaged policy-oriented scholars and experts from the business community to discuss the impact of oil price fluctuations on macro fundamentals, international trade, strategies of oil cartels, strategic risk management, and opportunities for change in energy systems.
Natalya Volchkova, Policy Director of CEFIR, presented a topic "Oil price fluctuations and international trade".
For more information and research analysis please visit: www.hhs.se/site
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Oil has for decades been perceived as a necessary and highly addictive energy commodity, fueling the world economy. It is a crucial input good for most of the net-oil consumer countries, and it is an important source of revenue for the net-oil supplier countries. This means that any changes in the oil price will affect the entire world economy. Chloé Le Coq and Zorica Trkulja from Stockholm Institute of Transition Economics have written a policy brief that explains to what extent the oil-price fluctuations matter for the economy.
Read more: https://www.hhs.se/site
Developing economies are different than developed economies in many aspects, i.e., in terms of institutional framework and political situation etc. Thus, the monetary policy needed in developing countries is also different than developed countries. The goal of this study is to investigate exchange rate channel of monetary transmission mechanism in a developing country’s setup. The variables included in our analysis are interest rate, exchange rate, exports, consumer price index and gross domestic product. Johansen cointegration technique is applied to analyze the long run relationship among variables while multivariate VECM granger causality test is used to explore the direction of causality among the set of our variables. We use annual data ranging from 1980 to 2015 while taking account of the limitations of time series data. Our findings suggest that output has a negative long run relationship with exchange rate and interest rate, positive relationship with exports and no statistically significant relationship with inflation. Interest rate granger causes all four of our variables thus showing the power of this policy tool. Exchange rate causes exports, consumer price index and output which means exchange rate is the second most powerful variable in our analysis. Output is granger caused by interest rate, exports and exchange rate which confirms the sensitivity of output to these variables. Consumer price index is granger caused by all four of our variables and came out to be the most sensitive variable in our analysis.
The study gauged the influence of exchange rate fluctuations on the Performance of the Nigerian Economy over the time from of 1986 to 2016, utilizing secondary data tracked from the statistical report of the Apex Nigerian bank, and utilizing techniques such as Unit root test, Generalized autoregressive conditional heteroscedasticity (GARCH), Impulse-Response Output and Variance-Decomposition Test to evaluate variables such as Interest rate, inflation rate, exchange rate against a sole indicator of Economic Performance I.e. Gross Domestic Product Growth rate (GDPGR), it was discovered that despite the short run influx of the spill over volatility of Interest rate and inflation rate, there exist no long run volatility influence of interest rate on Economic Performance in Nigeria. It was therefore recommended that the apex financial institution and relevant policy makers should ensure an interest rate system and status that could stimulate growth or production and the nation should endeavour to utilize her interest rate in controlling its output level as it motivates Economic Performance (GDPGR).
Russia’s dependence on oil and other natural resources is well known, but what does it actually mean for policy makers’ ability to control the economic fate of the country? This brief provides a more precise analysis of the depth of Russia’s oil dependence. This is based on a careful statistical analysis of the immediate correlation between international oil prices — that Russia does not control — and Russian GDP, which policy makers would like to control. I then look at how IMF’s forecast errors in oil prices spillover to forecast errors of Russian GDP. These numerical exercises are striking; over the last 25 years oil price changes explain on average two thirds of the variation in Russian GDP growth and in the last 15 years up to 80 percent of the one-year ahead forecast errors. Instead of controlling the economic fate of the country, the best policy makers can hope for is to dampen the short-run impact of oil price shocks. A flexible exchange rate and fiscal reserves are key volatility dampers, but not sufficient to protect long-term growth. The latter will always require serious structural reforms and the question is what needs to happen for policy makers to take action to get control over the long-term fate of the economy.
Komonditi Export Mining Sector Analysis of Southeast Sulawesitheijes
The International Journal of Engineering & Science is aimed at providing a platform for researchers, engineers, scientists, or educators to publish their original research results, to exchange new ideas, to disseminate information in innovative designs, engineering experiences and technological skills. It is also the Journal's objective to promote engineering and technology education. All papers submitted to the Journal will be blind peer-reviewed. Only original articles will be published.
Pattern and Determinants of Export Diversification in BangladeshMd. Moulude Hossain
This paper analyzes the pattern and the main determinants of
export diversification in Bangladesh. A large data set of Bangladesh export during the period of 1980-81 to 2006-07 has been used for this purpose. Three main indexes have been used to explore the trend of export concentration and these three indicators of export diversification were calculated to determine the trend of export from Bangladesh. The
Hirschman Index, the Ogive Index and the Entropy Coefficient were used to analyze the diversification pattern of export from Bangladesh. From the analyses, robust evidence has been found across the specifications and indicators that the export basket of Bangladesh has continued to remain relatively undiversified and the country has not been able to translate its
comparative advantage into competitive advantage. Further, this study reveals that the export growth and overall economic growth are highly correlated and a robust restructuring in trade policy is needed for gaining momentum in diversification of export in Bangladesh. The analyses show that exports at the intensive margin account for the most important share of
overall trade growth. At the extensive margin, geographic diversification is more important than product diversification, especially for developing countries. Taking part in free trade agreements, thereby reducing trade barrier and costs, development of infrastructure and communication, extensive financing for export and policies emphasizing the development of human capital is now the need of time for improving diversification of export.
Globalization and liberalization puts the emphasis on exports as a technique in which developing countries like the Kingdom of Eswatini should adopt to expand their markets beyond their domestic market. For the developing countries to be international competitive in the global markets they need to minimize their production cost particularly on the products that are being exported. The production of most of the exported commodities needs lot energy from oil; hence there has been tremendous increase of oil and its by-product worldwide. The current oil demand for most countries in the world is not met because of insufficient reserves for crude oil in most countries. The Kingdom of Eswatini does not have an oil reserves or oil-refining facilities hence they depends on imports from the neighbouring states in order to meet the consumption requirement. The oil price shocks in the global market normally have adversely effects on various macroeconomic variables such as exchange rate since the oil is traded in US dollars. Oil and exchange rate are considered to be essential factors for domestic economies for developing countries like the Kingdom of Eswatini. The purpose of the study is to investigate the causal relationship between Lilangeni-dollar exchange rate and crude oil price by using the Toda-Yamamota approach. The study used daily time series from January 01st, 2005 to April 30th, 2018 of nominal exchange rate of Lilangeni (Eswatini currency [SZL]) vis-à-vis United States dollar (USD) data as well as the global price of Brent crude oil data that was used as a proxy for the Global crude oil price. The results from the Toda-Yamamoto Granger causality test revealed that there is a unidirectional causality from the global oil price to the Eswatini’s nominal exchange rate (SZL/USD). Hence the study concluded that the global crude oil price influence the Eswatini’s nominal exchange rate. Therefore the study recommends that in the formulating of Eswatini’s exchange rate policy emphases should be on the global oil prices in order not to misalign the Eswatini’s currency.
Currency fluctuations and inflation are the natural norm for most major economies. Numerous factors influence economic growth, including a country’s exchange rate system performance, the outlook for inflation, and interest rate differentials. These are the most significant factors that hinder the economic growth of every nation. As a result, this analysis investigates the impact of exchange rate and inflation on Nigeria’s growth performance from 1986 to 2021. Impulse response and variance decomposition were estimated. The real gross domestic product (RGDP) was used as a proxy for growth performance, while the inflation rate (IFNR), real exchange rate (REXR), and interest rate (INTR) were also used as proxies. The results of impulse response and variance decomposition estimates in the short-run (third quarter) and long-run (tenth quarter) show that real exchange rate D(REXR), INTR, and IFNR all have a positive impact on RGDP variation, with values of 13.38%, 31.88%, and 22.40%, respectively, in the third quarter. In the long run (the 10th quarter), REXR contributed approximately 28.76% of the variation in RGDP. The interest rate contributed 24.14%, while the IFNR has contributed about 28.27% of the variation in RGDP in the long run. Therefore, summing the contributions of REXR, INTR, and INFR to RGDP, these variables contributed about 81.17% of the variation in RGDP in the long run. Hence, the research concluded that REXR, INTR, and IFNR have a positive effect on growth performance as proxied by RGDP in Nigeria within the period of the research. The research recommended that the government should provide a policy that will reduce the excess growth of aggregate demand (AD) in the economy, which will reduce inflationary pressure, in order to achieve the sustainable development goals (SDGs) of 2030 in Nigeria, which include restoring economic growth and macroeconomic stability through macroeconomic variables such as the exchange rate, inflation, and other significant variables.
Long Run Impact of Exchange Rate on Nigeria’s Industrial Outputiosrjce
While many scholars have carried out a lot of research on the impact of exchange rate volatility and
price shocks on economic growth, this study departs from previous studies and seeks to provide suggestions for
Nigerian policy makers on the attainment of an ideal exchange rate necessary to boost industrialization and
industrial output. The economies of all the countries of the world are linked directly or indirectly through asset
and goods markets. This linkage is made possible through trade and foreign exchange. The price of foreign
currencies in terms of a local currency (i.e. foreign exchange) is therefore important to the understanding of the
growth trajectory of all countries of the world. The consequences of substantial misalignments of exchange rates
can lead to output contraction and extensive economic hardship. These therefore, bring up the issue of an ideal
exchange rate necessary for the achievement of a set of diverse objectives - economic growth, containment of
inflation and maintenance of external competiveness. This study employed the use of the ordinary least square
technique to examine the impact of exchange rate stability on industry output in Nigeria using annual time
series data from 1980 to 2013. The result of the study showed that domestic capital, foreign direct investment,
population growth rate, and real exchange rate were significant determinants of industrial output. The changes
in external balance and inflation were of little or no consequences to industrial output. Based on the findings,
the researcher recommended that conscious efforts should be made by government to fine-tune the various
macroeconomic variables in order to provide an enabling environment that stimulates industrial output and
eventual economic growth.
American Journal of Multidisciplinary Research and Development is indexed, refereed and peer-reviewed journal, which is designed to publish research articles.
The Effects of Macroeconomic Variables on Stock Returns in the Jordanian Stoc...Premier Publishers
This study investigated the effects of six macroeconomic variables on the stock returns in the Jordanian financial market between 1976 and 2016 using annual data. The study used the stock return data for 218 companies listed on the market and the quarterly data of the six macroeconomic variables (Industrial production, interest rates, money supply, inflation, GDP, import prices). Autoregressive Distributed Lag (ARDL) model was employed for the estimations. The reason to test these models in the Jordanian stock market was motivated by the fact that the returns of shares in the Arab markets in general do not follow the normal distribution. The results of the estimated ARDL model revealed that the industrial production has a statistically significant effect on the returns of shares at a significant level of 1 percent, and in line with the hypothesis of the study because the relationship was positive. The effect of the money supply on the stock returns is statistically significant, (positive impact of money supply on stock returns), while the impact of import prices was negative and statistically significant on the stock returns. This work has found that it is imperative to search for new markets for the disposal of Jordanian products, and not rely on traditional markets only such as Gulf markets, the Iraqi market, this requires policies to strengthen and support the role of local industries, to develop global quality requirements, and to develop preferential features for products to be compared with those in other foreign markets.
Impact Analysis of Petroluem Product Price Changes on Households’ Welfare in ...inventionjournals
This paper examines the impact of petroleum products price changes on household welfare in Zaria metropolis of Kaduna state. Respondents communities were stratified selected base on their geographical locations. Descriptive statistics and inferential statistics tools were employed and use for data analysis. Descriptive statistics was used to analyze socio economic characteristics of household head and to determine the price changes of petroleum products on households. while inferential statistical tools was employed to specifically show how price changes of petroleum products affect the household through increase in prices of petroleum products which causes decrease in demand for the products, and also have multiplier effect on goods and services. On the other hand, decrease in prices of petroleum products also increase the demand for the products in Zaria metropolis. To achieved this objective, non parametric chi-square test was employed. The results shows that, the three petroleum products that is, petrol (PMS), gas (LPG) and kerosene (DPK) of the study have an impact on household welfare. This indicated that increase in the petroleum products price changes causes decrease in demand of the products, while on the other hand the decrease of the petroleum products prices causes increase in demand for the products which was in conformity with the demand theory that was adopted in this study. The study also recommends, government should deregulate the downstream petroleum sector to allow for increase participation and competition which will alternatively result in reducing prices of petroleum products Moreover, emphasis on alternative sources of energy such as gas, solar, wind and hydraulic sources should put into consideration. Government should expanded consumption capacity effect which will translate to increased demand for varied consumer good and hence increased sales and profitability of a number of Nigerians
Extant literature revealed that international trade plays a key role to address the economic phenomena and can help to earn foreign exchange. Despite the accruable benefits from international trade and the countrys huge oil export that account for about 90 of its foreign exchange earnings, Nigerias trade balance and exchange rate remain unfavourable. The persistent rise in Nigerias exchange rate and unfavourable trade balance in recent time warrants an empirical probe. This study therefore examines the effect of exchange rate, domestic income, foreign income, consumption expenditure, money supply and interest rate on trade balance using a secondary time series data covering a period of thirty years from 1991 2020. The study employed a regression technique of the Ordinary Least Square OLS . All data used were secondary data obtained from the statistical bulletin of Central Bank of Nigeria CBN and National Bureau of Statistics NBS annual publications. After determining stationarity of the study variables using the ADF Statistic, it was discovered that the variables were all integrated at level, first and second difference, and found out to be stationary at their first difference. The study also using Johansen Cointegration Test, found that there is a long run relationship between the variables. Hence, the implication of this result is that there is a long run relationship between trade balance and other variables used in the model. From the result of the OLS, it is observed that exchange rate, domestic income, foreign income and money supply have a positive and significant impact on trade balance in Nigeria. The study recommends that the government should fixed or peg on the exchange rate through the central bank. This will enable the government to buy and sell its own currency against the currency to which it is pegged. The government should strive to reduce inflation to make exports more competitive. The government should also enhance supply side policies to increase long term competitiveness. Edokobi, Tonna David | Okpala, Ngozi Eugenia | Okoye, Nonso John "Exchange Rate and Trade Balance Nexus" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45079.pdf Paper URL: https://www.ijtsrd.com/management/public-sector-management/45079/exchange-rate-and-trade-balance-nexus/edokobi-tonna-david
Exchange Rate Volatility and Import Substitution in Nigeria: A Sectoral AnalysisAJHSSR Journal
ABSTRACT: The study attempts to estimate the impact of exchange rate volatility on import substitution in
Nigeria. The study establishes that the volatility in exchange rate has a detrimental effect in the agricultural
sector in the short run, but this normalizes in the long run, thus having a positive permanent effect. Similarly,
the empirical results depict that the demand for the consumer goods sector was negatively affected by exchange
rate shocks in the initial stage, but over the periods had a positive effect. The result of the food sector, however,
conforms with the apriori expectation that currency exchange rates have a significant impact on food prices.
Food prices are likely to respond as the Naira weakens or strengthens vis a visother currency.This study
provides empirical evidence to drive policy formulation in the management of the country’ foreign exchange
rate as it impacts on trade of goods and services, andprovides information that may guide more studies on the
subject.
Keywords: Exchange rate volatility; Import substitution; Agricultural sector; GARCH; Vector autoregression
The main objective of this study is to determine the impact of oil price volatility on macroeconomic variables and sustainable development in Nigeria. The significant role of oil in the Nigerian economy cannot be overestimated. Though there are studies by other researchers on oil prices and macroeconomic variables, their findings are contentious and country-specific. Our literature review and methodology shade lights on these positions. We used secondary time series data in a vector auto regression analysis. We found that fluctuations in oil prices do substantially affect the real GDP, exchange rates, Unemployment, Balance of payments and interest rates in Nigeria. Negative shocks in the international oil market, have significant impact on price fluctuations. Due to increased imports in the Nigerian economy, inflationary pressures are inevitable and are pronounced. Government revenues and expenditures have decreased significantly. We recommend diversification of the economy and energy sources for sustainable development in Nigeria.
Factors Influencing Exchange Rate: An Empirical Evidence from BangladeshMd. Shohel Rana
Factors Influencing Exchange Rate: An Empirical Evidence
from Bangladesh
By Md. Shohel Rana, Tanvir Hasan Anik & Md. Nurul Kabir Biplob
Begum Rokeya University
Global Journal of Management and Business Research: C
Finance
Volume 19 Issue 6 Version 1.0 Year 2019
Type: Double Blind Peer Reviewed International Research Journal
Publisher: Global Journals
Online ISSN: 2249-4588 & Print ISSN: 0975-5853
Many countries have seen the importance of financial education by making financial
education a national strategy. In Vietnam, although the National Strategies for Inclusive Financial
Education has been proposed since 2017 and officially included in the National Financial Inclusion
Strategy in 2020, however, financial education is still quite new, and many people are not aware of
the necessity of financial l
Today, in the rapidly emerging globalization process, increasing the competitiveness of enterprises
depends on increasing of their firm performance. Although there are many methods and techniques affecting
firm performance, Information technology (IT) capabilities has become one of the most widely used method,
especially in dealing with supply chain matters of a firm. The aim of our study is to express whether innovation
and organization learning is effective as intermediate variable to the effects of IT capabilities at firm’s
performance. The opinion which claim
Globally, the number of startup companies has rapidly expanded during the last 5-8 years. Offering
products and/or services that greatly enhance the lives of its clients is a major focus for these firms. In India,
local and federal government initiatives have provided new enterprises and entrepreneurs with much
momentum and assistance, helping India become the world's top startup location. The Government of India
(GOI) launched the "Startup India" campaign in 2015 to promote entrepreneurship and support businesses to
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Premium Exchange Rate and Output Growth in African Oil Producing Countries
1. International Journal of Business Marketing and Management (IJBMM)
Volume 5 Issue 8 August 2020, P.P. 34-41
ISSN: 2456-4559
www.ijbmm.com
International Journal of Business Marketing and Management (IJBMM) Page 34
Premium Exchange Rate and Output Growth in African Oil
Producing Countries
Ogunsakin Sanya (Ph. D), Ikotun Anuoluwa Seun Ph.D
Ekiti State University, Ado-Ekiti, Department of Economics, Faculty of the Social Sciences, Telephone No:
08035821082
Abstract: This study investigated the relationship between premium exchange rate and output growth in
African oil producing countries between 1995 to 2018 using panel Vector Error Correction as estimation
technique Data for the study were sourced from World Bank Development indicator data base, IMF online data
base and Central Banks of the selected countries. Finding from the study showed that the responses of output
growth and other macroeconomic variables to shocks coming from both oil price and premium exchange rate
was direct, negative and significant. The study concludes that premium exchange rate is detrimental to the
growth of selected economies. The study therefore, recommends that to achieve sustainable economic growth in
the selected countries, the elimination of premium exchange market is needed. This can be achieved through
reducing the rationing in the official exchange markets.
Keyboards: Premium exchange rate, output growth, world oil price and PVECM.
SECTION ONE
I. Introduction
Excess demand for foreign currencies has become one of the features of developing economies. As a
result, governments place controls on trade and capital flows to reduced this exceed demand over supply
through various controls and restrictions. Since restrictions have been placed, monetary authority therefore
fixed the rate at which domestic currency should be exchanged for foreign currencies. Not only this, some rules
are introduced to be strictly followed in allocating foreign exchange. Based on these restrictions and directives
from apex bank, those whose demand are not met at official market sort for a relieve in parallel foreign
exchange market though at a rate much higher than the official exchange rate set by the monetary authority and
government. Akinbobola, Musbau and Rebecca (2018). Therefore, the monetary difference between official
exchange rate and black market exchange rate is known as parallel currency market premium. If this occurs, it
has significant effects on macro-economic performance of economies involve. The existence of both official
and parallel market simultaneous is as a result of inability of central banks in various African oil producing
countries to meet the demand for foreign exchange at the various official markets.
The activities in international oil market may be linked to the behaviour of macroeconomic variables due to
relevance of oil in the production input. Oil is one of the production inputs that can have both symmetric and
asymmetric effects on economic growth of both oil producing and oil importing countries.
Oil being an internationally traded commodity, changes in its price has impact on exchange rate. Oil producing
countries may have their exchange rate appreciates when oil prices increase and have their exchange rate
depreciates when oil price falls. If any of these occurs (currency appreciation and currency depreciation) there
may be diversion or holding of currencies in the international currency markets. This of course is based on the
level of oil price volatility on exchange rate.
Despite the fact that both developed and developing nations have introduced and developed alternative forms of
energy, oil still responsible for the largest percentage of energy consumption globally. Therefore, fluctuation in
its price remains major external economic factor impacting countries worldwide. This of cause varies according
to the level of economic growth and economic development of a country.
Studies have been conducted on the relationship between oil price and macroeconomic variables particularly,
inflation, exchange rate and output growth in various oil producing countries in Africa. This has however
brought about agitation about actual role plays by oil price in the determination of macroeconomic variables
particularly exchange rate and inflation. Take for instances, Olomola and Adejumo (2018), Ogundipe and
Ogundipe (2013), Obioma and Eke (2015), Aliyu (2009) Ogunsakin and Oloruntuyi (2017) and several others
where they confirmed in their various studies that oil price has predictive power on exchange rate and general
price level. That is, when there is an increase in crude oil price at international oil market, exchange rate
appreciates, relatively but depreciates significantly when oil price falls. In the view of Obioa and Eke (2015) and
2. Premium Exchange Rate And Output Growth In African Oil Producing Countries
International Journal of Business Marketing and Management (IJBMM) Page 35
Ogundipe and Egbedokun (2013) the transmission mechanism of oil price effects on inflation is through
exchange rate instead of the view of monetarists that says it emanating from oil price which produces negative
and significant response from exchange rate which passes through to general price level. However, from some
studies Alema, Kapper and Lame, (2015) which was a total departure from the other studies, it says decrease in
oil price have an appreciative effects on real effective exchange rate, implying a loss of competitiveness in
exchange rate while an increase in oil price, is discovered to have no importance in exchange rate determination.
Irrespective of the views of the authors mentioned, the relationship among exchange rate, inflation and oil price
in African producing countries is some how paradoxical.. paradox in that oil price increase has no influence
neither on general price level non on exchange rate movement, while reduction in oil price has wide negative
and significant effects on both inflation and exchange rate that always call for premium exchange market, with
this, it is therefore, important to study the impact of premium exchange market on some macroeconomic
fundamental because of the following reasons, first, it generates complications to the apex bank in an attempt to
manage the foreign exchange market, it impacts the level of international reserves, the position of the economy
and portfolio decisions of the public which is used as one of the determinants of domestic prices and official
foreign exchange earings of the countries. Akinbobola, Musbau and Rebecca (2018).
Therefore, the broad objective of this paper is to examine the relationship between premium exchange rate and
macro-economic variables in African oil producing countries.
The rest of the paper is structured thus, this introductory section is followed by section two that presents
literature, section three centres on methods and materials. Sections four deals with results and discussion While
section five concludes the paper.
II. Literature Review
Studies have been conducted on the relationship between exchange rate premium and macroeconomic
fundamentals. However, the exact direction of causality is still controvertial. Some of these studies are
presented here empirically to provide guides and direction for the model of this present study.
Nwafor (2014) investigated the behaviour of the exchange rate in Nigeria using pinto-model within the confines
of a reduce form linear stochastic model. Finding from this study showed that there is a long-run co-movement
between Nigeria naira and America dollar. In the same line of study, Akinbobola, Saibu and Rebecca (2018)
examined the relationship between parallel currency market premium and macroeconomic performance in
Nigeria between 1986 – 2015. The study made use of structural vector autoregressive model as estimation
technique. Results from this study showed that shocks emanating from PCM on the average produced more
variation in macroeconomic variables than response of PCM to shocks coming from macro-economic variables.
In advancing literature, Agenor and Taylor (1993). Investigated the causality that runs from official to parallel
exchange rate in 19 developing countries using both panel co-integration and panel granger – causality as
estimation techniques. Finding from this study showed that there was co-movement between official and
parallel exchange market in 14 countries while long-run relationship was not found in the remaining 5 selected
countries. Also, Tefer hemma (2004) examined the systemic analysis of the main determinants of the parallel
foreign exchange market in Ethiopia. The study employed vector error correction as estimation technique.
Results showed that depreciation of the official exchange rate, foreign exchange availability and one period
lagged money supply as well as export tax are the main determinants of parallel premium in the short-run.
Stamalevi (2015) Investigated the relationship between black market exchange premium and foreign direct
investment in Malawi using multiple regression to empirically carry-out the objective of the study. Finding
showed that black market exchange premium did not have effect on foreign direct investment. In a similar study,
Ogun (2015) studied the determinants of parallel market exchange rate premium in liberalized economies.
findings from this study showed both fundamentals and nominal determinants of the parallel market premium.
Juannah (2016) studied the relationship between parallel exchange market and macroeconomic variables, a
comparative study of oil producing and non oil producing countries in selected developing countries using panel
vector error correction as estimation technique. Finding from this study showed that macro-economic variables
reacted to shocks from oil price more negatively than the way macroeconomic variables reacted to shocks from
oil price in non-oil producing countries. Samuel (2017) investigated the relationship between exchange rate and
oil price in both developed and developing countries between 2000 to 2014 using panel Granger causality.
Finding showed that bi-directional relationship exists between exchange rate and oil price both in developed and
developing countries. Godwin, (2018) studied the relationship among exchange rate, premium exchange rate
and interest rate in Nigeria using co-integration as estimation technique. Finding showed that there was long-
run co-movement among the variables of interest. Besides , results further showed that foreign interest rate,
output gap, real effective exchange rate and general price level are major determinants of premium exchange
rate in Nigeria. In the same line of study, Girigori, (2016) examined the causal relationship between premium
exchange rate and real effective exchange rate in Nigeria using pairwire granger causality test as estimation
technique. Result from this study showed a bi-directional relationship between the two variables. Akinbobola
3. Premium Exchange Rate And Output Growth In African Oil Producing Countries
International Journal of Business Marketing and Management (IJBMM) Page 36
(1996) studied the determinants of parallel currency market premium in Nigeria using multiple regression as
estimation technique. Results showed that macroeconomic fundamentals are the major determinants of black
market exchange premium in Nigeria during the study period. Moris (1993) studied the dynamics and the
parallel market for foreign exchange in Uganda. Finding from the study revealed how unification of official and
parallel market exchange rates cause increase steady – state inflation based on the impact of fiscal policy on the
real official exchange rate changes. Onvoha (2014) investigated effect of exchange rate variation and inflation
on the growth of Nigerian economy using co-integration and error correction as estimation technique. Finding
from this study showed a positive but not statistical significant relationship between inflation and exchange rate.
In summary, consensus is yet to be reached as regards the exact relationship between exchange rate premium
and other macroeconomic variables. While some studies conclude that interest rate and inflation are major
determinants of premium exchange rate, some authors were of the views that activities in the international oil
market, that is, oil price, foreign interest rate and world gross domestic product are the major determinants of
premium exchange rate. Besides, most of the studies revealed were country specific, it is essential to a carry out
a panel study to actually establish the direction of causality among variables of interest to provide a rational
avenue for critical comparison.
III. Methods and material
Model specification.
The parallel exchange market is considered to be a financial transaction that are carried out illegally due to
insufficient foreign currencies in official or authorized currency market and trade restriction. In this regards and
to specify model for this study, some assumptions are being considered. First, prices of traded goods are
externally given, second, the existence of a non-traded goods sector, third, there is full employment in the
economy and monetary disequilibrium does not affect the rate of growth of real income. Based on these
assumptions, equation 3.1 is specified to estimate relationship between premium exchange rate and
macroeconomic variables in African oil producing countries.
RGDPgr = o + 1 wopt + 2 PEXRt + 3 R
EXRt + 4 INFt + 5 FIRt + 6 DIRt + et ---- 3.1
Where = RGDPgr = Real Gross domestic product growth rate.
WOP = World Oil Price
PEXR = Parallel Exchange Market
REXR = Official Exchange Market
INF = Inflation Rate
FIR = Foreign Interest Rate
DIR = Domestic Interest Rate
o + 1 Coefficients
et = Error term
E = Time variant
Estimation Techniques
The study employs panel Vector Error Correction model.
Sources of Data
Data for this study were sourced from world Development Indicators published by the World Bank, IMF online
Database and Central Banks of the selected countries.
IV. Results And Discussion
PANEL UNIT ROOT TEST
Table 4.1: Panel Unit Root Test Result
TEST AT LEVEL TEST AT FIRST DIFFERENCE
Variables LLC BT IPS LLC BT IPS
RGDPgr -4.2841* -5.5957* 6.8457* -10.2785* -6.4707* -11.3272*
PEXR 6.5183 -3.78563* 0.1865 -8.1441* -6.4715* -6.1359*
REXR -6.1870* 2.7944 -4.0380* -7.6159* -3.3024* -8.1499*
INF -3.6182* -4.5334* -3.5692* -9.9491* -7.6539* -9.9902*
WOP -0.7270 -0.8457 2.0963 -7.6726* -7.9752* -7.8901*
FIR -5.0532* -0.4362 -2.9025* -11.3399* -3.5888* -5.7198*
DIR 0.6655 -2.6872* -3.11536* -5.4395* -4.8455* -5.6265*
(*) connote rejection of unit root hypothesis at (5%) level of significance level
4. Premium Exchange Rate And Output Growth In African Oil Producing Countries
International Journal of Business Marketing and Management (IJBMM) Page 37
Source: Author’ s Computation, (2020)
Table 4.1 presents results of Levin-Lin-Chu test (LLC), Breitung test (BT) and Im-Pesaran-Shin test (IPS) panel
unit root test conducted in the study, both at level and at first difference. As reported in table 4.1, from one of
the tests conducted showed that most of the variables used in the study are stationary at level except world oil
price that became stationary at first difference. Based on this, all the variables of interest were subjected to first
difference. In this regards they all became stationary
Table 4.2: Panel Cointegraton test:
Kao Test
Test Value Prob
t-statistics -0.817208 0.2069
Pedroni Test
Test Values Prob
Panel v-Statistic -1.369618 0.9146
Panel rho-Statistic -0.269874 0.3936
Source: Author’ s Computation (2020)
With reflection of stationarity at level based on at least one of the unit root test result, and combine validation of
stationarity of all the unit root test after differencing the variables once, this study conducted both Kao and
Pedroni co-integration test to validate the presence of co-integration amidst the variables used, all in the quest
to ascertain the VAR estimation to be conducted. As reported in table 4.2, both Kao cointegration test and
pedroni co-integtaion test revealed that there is no enough evidence to reject the null hypothesis of no
cointegration, thus the study affirmed that there is no cointegration amidst the variables used in the study and
thus employed panel vector autoregressive (PVAR) estimation.
V. Impulse Response Analysis
The panel VAR estimation discussed in the light of impulse response of variable of interest to shock in other
endogenous variables in the VAR system. The impulse response overview as presented in figure 4.1 showed
how an identified variable of interest response to one standard deviation shock in other variables over a span of
periods. Notably, the analysis in the study covered a 10 year period which reflects the immediate and
intermediate response of corresponding variables to innovative shock. Notably, this study largely focused on the
response of economic growth measured in terms of real gross domestic product growth rate.
Overview of the response of real GDP growth rate and other endogenous variables in the system as shown in the
last column of figure 4.1, revealed that on the immediate and intermediate period between period 1 and period
10., growth rate of real gross domestic product in African oil producing countries declines in response to one
standard deviation shock in both prime exchange rate and real official exchange rate. Also shock in variables
including domestic interest rate (DIR), foreign interest rate (FIR), culminate into decline in the growth rate of
real gross domestic product of oil producing countries in Africa ceteris paribus especially on the intermediate
period between period 5 and period 10.
On the other hand, however, real GDP growth in the selected oil producing African countries responded
positively to one standard deviation shock in inflation rate and world oil price, rising progressively from period
1 through period 10. By implication, impulse response result reflect that the rate of economic growth in oil
producing Africa countries responded negatively and progressively to innovative shock in prime exchange rate
and real official exchange rate, as well as shock in world oil price, domestic interest rate and foreign interest
rate. This could be attributed to the fact that oil production and distribution tends to be fundamental to capital
inflow into most of African oil producing countries, and with its price controlled on a global scale, this could
have dynamics effects on both premium exchange rate and official exchange which could be detrimental to the
economic growth of the selected countries.
6. Premium Exchange Rate And Output Growth In African Oil Producing Countries
International Journal of Business Marketing and Management (IJBMM) Page 39
FORECAST ERROR DECOMPOSITION ANALYSIS
Table 3: Summary of Variance decomposition
Variance Decomposition of RGDPgr
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 100 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
10 3.66173 27.5002 53.4097 10.28734 1.96562 3.02992 0.14549
Variance Decomposition of PEXR
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 23.10883 76.89117 0.000 0.0000 0.0000 0.0000 0.0000
10 4.07013 31.01597 50.403 9.8924 1.8061 2.6413 0.1712
Variance Decomposition of REXR
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 13.37078 3.84743 82.782 0.0000 0.0000 0.0000 0.0000
10 3.64629 28.28412 53.219 9.5715 2.2210 2.8813 0.1766
Variance Decomposition of INF
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 9.193 2.985 46.134 41.6871 0.0000 0.0000 0.0000
10 4.385 26.969 52.478 10.2229 2.4569 3.2597 0.2284
Variance Decomposition of WOP
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 45.024 4.029 22.954 6.5595 21.4335 0.0000 0.0000
10 3.846 10.955 64.103 12.6672 3.3229 4.8060 0.3002
Variance Decomposition of FIR
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 0.273 0.362 45.749 23.5248 0.7553 29.3358 0.0000
10 6.013 37.343 42.787 8.5927 2.1452 2.7192 0.4008
Variance Decomposition of DIR
Period RGDPgr PEXR REXR INF WOP FIR DIR
1 0.020 1.035 2.098 61.3116 1.6811 5.3744 28.4799
10 3.493 28.079 52.888 10.1627 2.1978 2.9891 0.1903
SOURCE: Author’ s Computation (2020)
Variance decomposition reflect the contribution of each of the endogenous variables to forecast error variance in
a given variable of interest, the summary as presented in table 4.3 reported the 1st
and 10th
period contribution of
each corresponding variables to forecast error variance of the variable of interest.
Table 4.3 showed that 100% and 3.66178% of the forecast error variance in gross domestic product growth rate
can be accounted for by itself in period 1 and period 10 respectively, which reflects that real GDP growth rate of
the sampled oil producing countries is strongly endogenous in the short run but become weakly endogenous in
predicting its own variation on the long run. On the other hand, prime exchange rate accounted for 0% at period
1, and 27.50% at period 10, exchange rate account for 0% of the variation in real gross domestic product at
period 1, and 53.54% at period 10, while inflation rate, world oil [rice foreign interest rate and domestic interest
rate accounted for 0% respectively in period 1, but 10.28%, 1.96%, 3.029% and 0.14% respectively in period
10.
Overview of the forecast error variance decomposition showed that both prime exchange rate and official
exchange rate have strong influence on the growth rate of real gross domestic product especially on the long as
they both account for about 80.90% of forecast error variance in the growth rate of real gross domestic product
of oil producing counties sampled in the study. in a nutshell, prime exchange rate and real official exchange rate
account for significant variation in the level of economic growth of oil producing African countries ceteris
paribus.
Result also showed that real GDP growth rate accounted for 23.10% of the forecast error variance in prime
exchange rate in period 1, but at period 10 it only accounted for 4.07% of the variance. However prime
exchange accounted for 76.89% and 31.01% of forecast error variance in itself in period 1 and period 10
respectively.
7. Premium Exchange Rate And Output Growth In African Oil Producing Countries
International Journal of Business Marketing and Management (IJBMM) Page 40
In the case of real official exchange rate, real GDP growth rate accounted for 13.37% of forecast error variance
in real official exchange rate in period 1 and both it only accounted for 3.64% in period 10, while real exchange
rate accounted for 82.78% and 53.21% of forecast error variance in itself in period 1 and 10 respectively.
VI. Discussion of Results
The empirical analysis of this study started by subjecting variables of interest to stationarity test. Results from
this show that variables of interest became stationary at their first difference. Thereafter, panel co-integration
test was conducted through kao and pedroni co integration tests. Result obtained from this reveals that there is
no enough evidence to reject the null hypothesis of no co-integration. This finding is intandem with finding of
Tefera (2004) in a similar study. Results from Impulse response function show that response of real GDP
growth to standard deviation shocks from inflation and world oil price was negative but significant. This
finding is equally compatible with the results obtained by Raidwan (2016) in a related study. Response of output
growth rate to standard deficit shocks from parallel exchange rate, domestic interest rate and official interest rate
was negative but significant. This finding is in line with result obtained by Godwin (2018) in a similar study
but negative the finding of Juannuh (2016) in the same study but country specific.
Post Estimation Test
Summary and conclusion
VII. Section Five
In this paper, the relationship between parallel currency market premium and economic growth in African oil
producing countries was examined. Data for the study were sourced from World Bank’ s Development
Indicators (WDI), International monetary fund online Data base and Central Banks of the selected countries.
The study employed panel VECM as estimation technique. Results from our empirical estimations showed that
premium exchange rate has a direct and significant effects on output growth in African oil producing countries.
This is based on the fact that the average response of output growth rate and other macroeconomic variables to
shocks emanated from premium exchange rate was direct, significant and negative. Based on these findings, the
study therefore concludes that premium exchange rate is detrimental to macroeconomic performance in African
oil producing countries. The study recommends that performance of official foreign exchange market should be
enhanced by reducing foreign currencies rationing. If that is done, the level of patronage in black currency
market will be reduced.
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