A cross-country analysis of the determinants of the real effective exchange rate in fifteen Sub-Saharan African countries

Zameelah Khan Jaffur (), Boopen Seetanah () and Noor-Ul-Hacq Sookia ()
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Zameelah Khan Jaffur: University of Mauritius
Boopen Seetanah: University of Mauritius
Noor-Ul-Hacq Sookia: University of Mauritius

Economics Bulletin, 2020, vol. 40, issue 2, 1686-1697

Abstract: This paper employs an Autoregressive Distributed Lag (ARDL) approach to examine the long-run and short-run determinants of the real effective exchange rate in fifteen Sub-Saharan African (SSA) countries using annual data spanning from 1980 to 2015. Not surprisingly, the findings show that the determinants vary from one country to another. Terms of trade, GDP per capita, net foreign assets and trade openness are found to be key factors that cause fluctuations in the real effective exchange rate of most of these countries in the long-run. Whereas in the short-run, the drivers of the real effective exchange rate differ from country to country. We further observe that there is also a difference in the speed that each country adjusts back to the equilibrium level of their real effective exchange rate whenever there is a shock in the latter.

Keywords: determinants; real effective exchange rate; Sub-Saharan African countries; ARDL (search for similar items in EconPapers)
JEL-codes: C5 O1 (search for similar items in EconPapers)
Date: 2020-06-18
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Citations: View citations in EconPapers (2)

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