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An Empirical Test of Real Exchange Rate Overshooting in Selected African Countries

Author

Listed:
  • Khumalo, Zitsile Zamantungwa
  • Eita, Joel Hinaunye
  • Choga, Ireen

Abstract

Exchange rate overshooting explains the daily behaviour of exchange rates. Irrespective of the importance of this prodigy, not enough studies specifically in the African context have been conducted. Hence, the study aims to investigate the validity of the overshooting hypothesis in a panel of African countries. It is informed by the Dornbusch model of exchange rate overshooting. The random effects technique is employed to test for this relationship during the sample period of 1985 to 2016, with the findings of the study revealing evidence of exchange rate overshooting.

Suggested Citation

  • Khumalo, Zitsile Zamantungwa & Eita, Joel Hinaunye & Choga, Ireen, 2020. "An Empirical Test of Real Exchange Rate Overshooting in Selected African Countries," MPRA Paper 101303, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101303
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    References listed on IDEAS

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    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications

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