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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Estimating exchange rate and bilateral trade balance relationships: the experience of sub-Saharan African countries
Authors:Yol, Marial AwouISNI
Baharumshah, Ahmad ZubaidiISNI
Periodical:South African Journal of Economics
Geographic term:Africa
Subjects:balance of trade
exchange rates
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2007.00104.x/pdf
Abstract:This paper examines the effects of exchange rate changes on the bilateral trade balance of ten African countries - Botswana, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal, Tanzania, Tunisia, and Uganda - vis--vis the US using annual data over the period 1977-2002. The study employs the S. Johansen and panel cointegration approach in addition to fully modified ordinary least squares (FMOLS) on annual data collected from the IMF/IFS database.The country FMOLS results show that real exchange rate depreciation improves the trade balance in six of the ten countries in contrast to Tanzania, in which it worsens the trade balance, with no effect found in Ghana, Morocco and Senegal. Foreign real income improves the trade balance in two countries but worsens it in another three. Finally, domestic real income negatively affects the trade balance in four countries but improves it in another three. The three-panel coefficients are correctly signed and significant at the 1 percent level. Bibliogr., notes, ref., sum. [Journal abstract, edited]