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The Impact of Real Exchange Rate Volatility on South African Exports to the United States (U.S.): A Bounds Test Approach

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  • Lira SEKANTSI

    () (Department of Economics, National University of Lesotho,P.O. Roma 180, Maseru 100 Lesotho)

Abstract

This research paper empirically examines the impact of real exchange rate volatility on trade in the context of South Africa’s exports to the U.S. for the South Africa’s floating period January 1995-February 2007. In measuring real exchange rate volatility, this study utilised GARCH. After establishing the existence of cointegration among the variables involved in our two-country export model, we estimated long-run coefficients by means of ARDL bounds testing procedure proposed by Pesaran, et al.(2001). Our results indicate that real exchange rate volatility exerts a significant and negative impact on South Africa’s exports to the U.S. Therefore, stable and competitive exchange rate and sound macroeconomic fundamentals are required in order to improve international competitiveness and greater penetration of South African exports to international markets.accounting and taxation, we applied the method proposed in 1998 by Lamb et al. and developed by Nobes et Schwenke (2006). Six cases are available: from disconnection (case I) to identity (case II), through the various cases of influence on accounting aver taxation or vice-versa. Despite the short period considered (20 years), our results confirm a de jure disconnection between Romanian financial accounting and tax accounting, as suggested by Petre and Lazar (2006). But, one should not to much rely on appearances: in many cases, the accounting practice in Romania (especially SMEs) in marked by a close relationship with taxation.

Suggested Citation

  • Lira SEKANTSI, 2011. "The Impact of Real Exchange Rate Volatility on South African Exports to the United States (U.S.): A Bounds Test Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 8, pages 119-139, December.
  • Handle: RePEc:aic:revebs:y:2011:i:8:sekantsil
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    References listed on IDEAS

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    Cited by:

    1. Fourie, Justin & Pretorius, Theuns & Harvey, Rhett & Henrico, Van Niekerk & Phiri, Andrew, 2016. "Nonlinear relationship between exchange rate volatility and economic growth: A South African perspective," MPRA Paper 74671, University Library of Munich, Germany.
    2. Mashilana Ngondo & Hlalefang Khobai, 2018. "The impact of exchange rate on exports in South Africa," Working Papers 1809, Department of Economics, Nelson Mandela University, revised Mar 2018.

    More about this item

    Keywords

    exchange rate volatility; Autoregressive distributed lag (ARDL); Generalised Autoregressive Conditional Heteroskedasticity (GARCH) Bounds testing; unit root; Error Correction model; Cointegration;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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