Real exchange rate undervaluation and sectoral growth in South Africa

Mazorodze, Brian Tavonga; Tewari, Devi Datt

doi:10.1108/ajems-06-2017-0132

Cited by 7 publications

(4 citation statements)

References 40 publications

(83 reference statements)

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“…This implies that the deterioration of the real effective exchange rate hurts the economic growth of the region. The result found is consistent with the findings of the recent findings of [ 44 , 45 , 49 ].…”

Section: Resultssupporting

confidence: 93%

“…Tang (2015) found reverse causality that runs from economic growth to real exchange rate for the time series data of China’s economy. [ 49 ] Found positive and significant effect of undervaluation on the economic growth of South Africa using system generalized method of moment’s technique of dynamic panel data estimation for the sectorial growth.…”

Section: Literature Reviewmentioning

confidence: 99%

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On the fiscal deficit and economic growth in sub-Saharan Africa: A new evidence from system GMM

Sore,

Ayana,

Demissie

2024

PLoS ONE

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Using a two-step approach GMM, this study examines the short- and long-term effects of fiscal deficit on the economic growth of 42 Sub-Saharan African nations between 2011 and 2021. The World Development Index, the most reliable source, is where the panel data is taken from. Using the Levin-Lin-Chu and Hadri LM tests for unit root, it was determined that there is no risk of a random walk in the data. The study’s findings indicate that while the fiscal deficit has short-term, positive, and significant benefits on the economic growth of SSA countries, it has long-term, negative repercussions. According to the system GMM’s results, an increase in the fiscal deficit of SSA countries is linked to a short-term increase in economic growth of 0.036 percent, while an increase in the fiscal deficit of one percentage point is linked to a long-term decline in economic growth of SSA countries of 0.013 percent, holding all other factors constant. The study’s findings also showed that the budget deficit has a larger positive short-run coefficient than a negative long-run coefficient. The study also revealed that while real effective exchange rates and inflation short-term hinder economic growth, gross fixed capital creation and real interest rates are the primary drivers of economic expansion. Long-term economic growth in the SSA countries is also found to be positively and significantly impacted by gross fixed capital formation. According to the study, SSA nations should manage their fiscal deficits and, in the long run, provide more funds for gross fixed capital development.

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Section: Resultssupporting

confidence: 93%

Section: Literature Reviewmentioning

confidence: 99%

On the fiscal deficit and economic growth in sub-Saharan Africa: A new evidence from system GMM

Sore,

Ayana,

Demissie

2024

PLoS ONE

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“…The reason being that its response to root mean square error and finite sample bias has accorded its superiority over the differenced GMM. Further to the justification for this estimating technique, the model for this study conforms to the underlying assumptions stated by Roodman (2009) and Mazorodze (2017) regarding the use of the GMM technique. Some of these assumptions are: a panel having small T with large N (the sample for this study has 8 years ( T ) and 110 commercial banks ( N ), and some explanatory variables being endogenous and having idiosyncratic disturbance terms across the cross sections, among many others.…”

Section: Methodsmentioning

confidence: 84%

Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries

Olarewaju

2020

African Development Review

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A nonperforming loan refers to a loan that is not paid as and when due, and it is a significant issue that banks need to keenly consider for them to exist and be stable. There are several factors accountable for nonperforming loans; some are firm-specific, while others are macroeconomic factors. The study of banking sector stability is a foundation of modern macroeconomic policy of a bank-based economy. In this view, this study aims to investigate the determining factors from both perspectives. This study used the dynamic panel regression analysis on 110 commercial banks from nine countries for the years 2010-2017 and a total of 880 observations were examined. The system generalized method of moments found that lagged nonperforming loan, lending rate, capital adequacy, credit growth, cost income ratio, as well as real interest rate, were the significant factors affecting nonperforming loans in lower middle-income countries' banking sector. Hence, it is recommended that commercial banks ought to establish regulations to amend their policies regarding credit advancement in alignment with the factors highlighted above. Also, banks need to ensure their loaned-out funds are dedicated to the envisioned purpose via improved credit monitoring that would spur economic sustainability.

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“…These factors can have adverse effects on the prices of agricultural produce. In a study that covered the period 1984 to 2014, Mazorodze and Tewari (2018) posited that, during this period, the undervalued Rand boosted growth in agricultural exports.…”

Section: Literature Reviewmentioning

confidence: 99%

The effect of selected macroeconomic policies on citrus price volatility in South Africa: A reflection on experiences of farmer support

Kau

Mmbengwa

2023

J. Agribus. Rural Dev.

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The macroeconomic policies enacted by the South African government after democracy and their effects on the welfare of resource-poor farmers remains a subject of scholarly interest. It is not known if farmers are cushioned against exogenous macroeconomic shocks. The aim of this study was to analyse citrus price volatility in National Fresh Produce Markets and to study the effects of macroeconomic policy shocks. Secondary data for prices was sourced from the Johannesburg National Market. GARCH was employed as an empirical model to estimate price volatility. According to the results, price volatility for lemon and soft citrus is statistically insignificant. Price volatility for oranges was statistically significant at a 99% persistence level (α = 0.39, p = 0.0030) and (β = 060, p = 0.0000). The exchange rate (α = 0.05, p = 0.0000), CPI (α = –0.26, p = 0.0035) and prime lending rates (α = 0.12, p = 0.0026) were significant in explaining price volatility in oranges. Added values of the coefficient of α and β for Grapefruit amounted to 1.1, which means the price volatility was explosive. High levels of price volatility mean farmers are faced with the difficulty of projecting expected levels for farm income and profitability. The results provide insights into farm planning and decision making. It is recommended that the government provide farmers with resources that can cushion against price instability and enable them to access export markets.

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Real exchange rate undervaluation and sectoral growth in South Africa

Cited by 7 publications

References 40 publications

On the fiscal deficit and economic growth in sub-Saharan Africa: A new evidence from system GMM

On the fiscal deficit and economic growth in sub-Saharan Africa: A new evidence from system GMM

Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries

The effect of selected macroeconomic policies on citrus price volatility in South Africa: A reflection on experiences of farmer support

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