The impact of terms of trade and real exchange rate volatility on investment and growth in sub-Saharan Africa

Bleaney, Michael; Greenaway, David

doi:10.1016/s0304-3878(01)00147-x

Cited by 320 publications

(258 citation statements)

References 14 publications

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“…According to point estimates, the impact factor for domestic firms is (-0.5) at the 90 th percentile level of indebtedness (88%) as opposed to (-5.8) at the 10 th percentile level (29%). 12 For foreign firms, the impact factor increases from 0.9 at the 10 th percentile to 6.5 at the 90 th percentile level.…”

Section: <Insert Table 4 Here>mentioning

confidence: 98%

“…Previous studies show that foreign 11 The impact factors are based on the 10 th and 90 th percentile (1+log) levels of Exports t-1 corresponding to 0.000 and 0.513. 12 The impact factors are based on the 10 th and 90 th percentile (1+log) levels of Leverage t-1 corresponding to 0.253 and 0.630. firms and stock market listed firms are more profitable and productive. Therefore we introduced the profitability and productivity rates in a lagged form to avoid reverse causality and parameter endogeneity problems.…”

Section: Controlling For Profitability and Productivity Differences mentioning

confidence: 99%

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Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?

Demir

2013

Journal of Development Economics

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Employing a matched employer-employee dataset, this paper explores the effects of exchange rate volatility on the growth performances of domestic versus foreign, and publicly traded versus non-traded private manufacturing firms in a major developing country, Turkey. The empirical results using dynamic panel data estimation techniques and comprehensive robustness tests suggest that exchange rate volatility has a significant growth reducing effect on manufacturing firms. However, having access to foreign, and to a lesser degree, domestic equity markets is found to reduce these negative effects at significant levels. These findings continue to hold after controlling for firm heterogeneity due to differences in export orientation, external indebtedness, profitability, productivity, size, industrial characteristics, and time-variant institutional changes.

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confidence: 98%

Section: Controlling For Profitability and Productivity Differences mentioning

confidence: 99%

Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?

Demir

2013

Journal of Development Economics

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“…However, recent studies closely related to this study are reviewed. Bleaney and Greenaway (2000) examines the impact of term of trade and real exchange rate volatility on investment and growth in Sub-Saharan African countries. The study makes use of panel data consisting of fourteen SubSaharan African countries between the periods of 1980-1995.…”

Section: Literature Reviewmentioning

confidence: 99%

Real Exchange Rate, Exchange Rate Volatility and Trade Balance in Sub-Saharan African Countries: A Generalized Method of Moment (GMM) Approach

Akani

Dada²

2017

ijsrm

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This study examines the effect of real exchange rate and exchange rate volatility on trade balance in SubSaharan African countries from 2006 to 2016. Fourteen countries in the region are selected for the study. Generalized Method of Moment (GMM) is used as the estimation technique, and exchange rate volatility is generated from real exchange rate using Generalized Autoregressive Conditional Heteroskedasticity (GARCH). The result shows that real exchange rate and exchange rate volatility have positive and significant effect on trade balance in sub-Saharan African countries. Furthermore, gross domestic product (domestic income) has positive and significant effect on trade balance while world gross domestic product (foreign income) has negative effect on trade balance. The study concludes that the region should take advantage of exchange rate volatility in improving their trade balance.

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“…With its roots in the law of one price among integrated international goods markets, the theoretical concept of the REER as well as its practical impact on countries' output and wealth have been extensively studied in the literature (Aghion et al, 2009;Bleaney and Greenaway, 2001). With ongoing globalisation and financial integration, however, capital flows now account for a major share of cross-border transactions (Hau and Rey, 2004).…”

Section: Introductionmentioning

confidence: 99%

Real financial market exchange rates and capital flows

Gelman

Jochem

Reitz

et al. 2015

Journal of International Money and Finance

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Title: Real Financial Market Exchange Rates and Capital FlowsAuthor: Maria Gelman, Axel Jochem, Stefan Reitz and Mark P. Taylor Abstract: Foreign exchange rates, asset prices and capital movements are expected to be closely related to each other as international capital markets become more and more integrated. This paper provides new empirical evidence from an index of exchange-rate adjusted cross-country asset price ratios, which may be interpreted as a real effective financial exchange rate. The integrated stock-flow approach reveals that a county's real effective financial exchange rate is co-integrated with international investors' net foreign holding of its assets. The associated error correction equations have useful interpretations against the backdrop of uncovered return parity and investor portfolio rebalancing behavior. This paper provides new empirical evidence from an index of exchange-rate adjusted crosscountry asset price ratios, which may be interpreted as a real effective financial exchange rate. The integrated stock-flow approach reveals that a country's real effective financial exchange rate is cointegrated with international investors' net foreign holdings of its assets.The associated error correction equations have useful interpretations against the backdrop of uncovered return parity and investor portfolio rebalancing behavior. This paper provides new empirical evidence from an index of exchange-rate adjusted crosscountry asset price ratios, which may be interpreted as a real effective financial exchange rate. The integrated stock-flow approach reveals that a country's real effective financial exchange rate is cointegrated with international investors' net foreign holdings of its assets.The associated error correction equations have useful interpretations against the backdrop of uncovered return parity and investor portfolio rebalancing behavior.JEL: F31, G15, E58

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The impact of terms of trade and real exchange rate volatility on investment and growth in sub-Saharan Africa

Cited by 320 publications

References 14 publications

Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?

Growth under exchange rate volatility: Does access to foreign or domestic equity markets matter?

Real Exchange Rate, Exchange Rate Volatility and Trade Balance in Sub-Saharan African Countries: A Generalized Method of Moment (GMM) Approach

Real financial market exchange rates and capital flows

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