Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania

Kurtović, Safet; Halili, Blerim; Maxhuni, Nehat

doi:10.1515/ngoe-2017-0016

Cited by 2 publications

(1 citation statement)

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“…The authors argued that findings of the study recommended adopting policy measures for managing exchange rate system to enhance the exports of Vietnam. In a related study, Kurtovic et al (2017) intended to reconnoiter REER and trade of Albania. The author collected the quarterly data for the period of 1994-2014 and employed ARDL bound testing co-integration; Vector Error Correction Model (VECM); and Impulse Response Function for the estimation purposes.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of Currency Depreciation on Exports of SAARC Countries

Kumar

Begam

2020

Asian Journal of Economic Modelling

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Conventionally, it is believed that decline in value of currency tends to improve exports due to relatively cheaper items making imports expensive specifically for developing economies. Hence, the aim of the study is to investigate the impact of currency depreciation on exports of SAARC countries from 1981 to 2017 using panel ARDL and ECM techniques. Correspondingly, four SAARC countries-Bangladesh, India, Pakistan, and Sri Lanka have been selected employing the data of real effective exchange rate, exports, inflation, and gross capital formation. The panel ARDL model has approved an inverse association of currency depreciation with exports in the long run and significant implication of ECM in the short run. The estimated findings have pointed towards the prevailing circumstances at both regional and country level. An inelastic nature of exportable products; lack of market diversification, confinement of domestic demand in international markets; and limited regional integration among SAARC economies are the prominent attributes of deteriorating exports. Precisely, these elements restrict the economies to bear the fruits of currency depreciation. It is concluded that SAARC economies have the potential to enhance their exports as these virtually exhibit same production patterns; and divergent comparative advantages. It is thus essential for the countries to cope up with inter and intra-regional risks and issues immediately in order to grab wider global economic prospects through enhancing exports competitiveness. Contribution/ Originality: The study contributes in the literature while providing the implication of currency depreciation on exports of selected economies of SAARC region. The estimated value of real effective exchange rate has been found to exert indirect pressure on exports which proves that depreciation reduces the export growth in South Asian region. 1. INTRODUCTION In today's globalized era, the impact of exchange rate on exports has grabbed the attention of economists, and policymakers. This nexus is considered significant in sundry of emerging and developing economies as exports in these economies are considered central for growth and development (Alege and Osabuohien, 2015).This could be attributed to an increase in emphasis on export-led growth with minimum trade restrictions and rapid liberalization in economies. Thus, a well mix of these strategies would assess to bear the advantages of exchange rate swings with more capital formation (Koirala, 2018). On the other side, it is also a well-established outlook that an increase in

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Section: Literature Reviewmentioning

confidence: 99%