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The effects of exchange rate changes on Sub-Saharan Africa trade

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  • Christelle Meniago
  • Joel Hinaunye Eita

Abstract

This study investigates the impact of exchange rate changes on imports, exports and trade balance in Sub-Saharan Africa (SSA). The results indicate that there is a positive relationship between exchange rate changes and imports, albeit the degree of responsiveness was extremely low. These were inconsistent with economic theory and can be attributed to the fact that many African countries largely depend on imports, and tend to be invariant to exchange rate changes. Hence, a depreciation of their exchange rates may have little or no effects on imports. The study recommends that SSA authorities draw up strategies and programs that will make the economies less reliant on imports. The significant negative relationship found between exchange rate changes and exports suggests that the policy of exchange rate depreciation may not have the desired effects of boosting exports. The study found no significant relationship between exchange rate changes and trade balance.

Suggested Citation

  • Christelle Meniago & Joel Hinaunye Eita, 2017. "The effects of exchange rate changes on Sub-Saharan Africa trade," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 9(3), pages 213-230.
    • Handle: RePEc:ids:ijsuse:v:9:y:2017:i:3:p:213-230
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    References listed on IDEAS

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    1. Mr. Peter B. Clark & Shang-Jin Wei & Ms. Natalia T. Tamirisa & Mr. Azim M Sadikov & Mr. Li Zeng, 2004. "A New Look at Exchange Rate Volatility and Trade Flows," IMF Occasional Papers 2004/009, International Monetary Fund.
    2. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
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    Cited by:

    1. Yaya KEHO, 2021. "Asymmetric Effects of Real Exchange Rate on Trade Balance in Cote d’Ivoire: Evidence from Nonlinear ARDL Approach," Applied Economics and Finance, Redfame publishing, vol. 8(3), pages 9-21, May.
    2. Adamu Braimah Abille & Oytun Meçik, 2024. "Macro-determinants of current account balance performance in selected African countries," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 26(3), pages 1083-1102, December.
    3. Pabai Fofanah, 2020. "Effects of Exchange Rate Volatility on Trade: Evidence from West Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 12(3), pages 32-52.
    4. Izunna Chima Anyikwa & Lehlohonolo Domela, 2022. "Asymmetric effects of exchange rate volatility on trade flows in BRICS economies," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 46(3), pages 224-247, July.
    5. Moloko Kholofelo Mokgokong & Ireen Choga, 2024. "Analysing Real Exchange Rate Effects on the Trade Balance in South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 14(6), pages 64-76, October.
    6. Kenneth Chikezie Anyalechi & Emeka Okereke & Ikechukwu S. Nnamdi, 2020. "Export Trade and Real Exchange Rate Dynamics in Sub-Saharan Africa: A Dynamic Panel Analysis," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(9), pages 222-227, September.

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