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Asymmetric response of domestic production to exchange rate changes: evidence from Africa

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  • Mohsen Bahmani-Oskooee

    (The University of Wisconsin-Milwaukee)

  • Augustine C. Arize

    (Texas A&M University-Commerce)

Abstract

In this paper we consider the asymmetric effects of real effective exchange rate changes on domestic production of 13 African nations, the first comprehensive study on the topic in Africa. We find that exchange rate changes have short-run and long-run asymmetric effects on output in most countries in Africa. However, the results are country specific. In some countries a depreciation is expansionary but appreciation has no effect on output. In some countries, an appreciation hurts domestic output but a depreciation has no effects. Such findings are possible only if we separate appreciations from depreciations and adhere to nonlinear modeling.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Augustine C. Arize, 2020. "Asymmetric response of domestic production to exchange rate changes: evidence from Africa," Economic Change and Restructuring, Springer, vol. 53(1), pages 1-24, February.
    • Handle: RePEc:kap:ecopln:v:53:y:2020:i:1:d:10.1007_s10644-018-9240-y
    DOI: 10.1007/s10644-018-9240-y
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    3. Nusair, Salah A. & Olson, Dennis, 2021. "Asymmetric oil price and Asian economies: A nonlinear ARDL approach," Energy, Elsevier, vol. 219(C).
    4. Misbah Nosheen & Beenish Chohan & Javed Iqbal & Mark Wohar, 2023. "Asymmetric response of domestic production to exchange rate changes: Evidence from southeast Asian countries," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 37(2), pages 54-75, November.

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    More about this item

    Keywords

    Africa; Domestic output; Exchange rate; Asymmetry analysis;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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