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Impact of international income, prices and monetary shocks on real exchange rate in eight African economies: An empirical study

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  • Giscard Assoumou Ella

    (University of Toulon)

Abstract

This study characterizes imported inflation in eight African countries through the effect of income and consumer prices index in OECD countries shocks, world price of oil shock and Federal funds effective rate shock on real exchange rate between 1970 and 2007, using a SVAR Model. We develop theoretical and empirical models and the results suggest that real exchange rate is exposed to these shocks. In this context, the countries exposed must reform their economies in order to be less dependent to the exports of raw materials and the imports of goods and services. The production of domestic goods and services conducts to the substitution of imports by these goods in period of inflation in industrialized countries and decreases imported inflation.

Suggested Citation

  • Giscard Assoumou Ella, 2013. "Impact of international income, prices and monetary shocks on real exchange rate in eight African economies: An empirical study," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 2(3), pages 41-54, September.
    • Handle: RePEc:chi:journl:v:2:y:2013:i:3:p:41-54
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    References listed on IDEAS

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    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • G01 - Financial Economics - - General - - - Financial Crises
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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