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Investigating the oil price-exchange rate nexus: Evidence from Africa

  • Simeon Coleman

    ()

    (Division of Economics, Nottingham Business School, Nottingham Trent University)

  • Juan Carlos Cuestas

    ()

    (Department of Economics, The University of Sheffield)

  • Estefanía Mourelle

    ()

    (Facultad de Ciencias Económicas y Empresariales, Universidade da Coruña)

In this paper, we aim to provide further insights into the importance of real oil price as a determinant of real exchange rates for a pool of African countries. While this relationship has been explored substantially for many industrialised economies, African countries have received little attention. By means of cointegration techniques and nonlinear dynamics we find that, for some of these countries, shocks in the real price of oil are particularly important in determining the real exchange rates, even in the long run. These results would be of interest for policymakers in order to deal more effectively with exchange rate policy decisions, aiming at promoting economic growth in the area.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2011_015.html
File Function: First version, 2011
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2011015.

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Length: 39 pages
Date of creation: May 2011
Date of revision: May 2011
Handle: RePEc:shf:wpaper:2011015
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