Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia

Abimelech Paye Gbatu, Zhen Wang, Presley K. Wesseh and Isaac Yak Repha Tutdel
Additional contact information
Abimelech Paye Gbatu: Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China
Zhen Wang: Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China
Presley K. Wesseh: China Center for Energy Economics Research, College of Economics, Xiamen University, Xiamen 361005, China.
Isaac Yak Repha Tutdel: Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 4, 119-131

Abstract: Studies envisioned to inform on major policy issues are paramount for Liberia's economic recovery. Therefore, we employ an unrestricted vector autoregressive model to analyze the dynamic associations between exchange rate volatility (ERV) and Liberia's real gross domestic product (RGDP). The empirical results show no significant relationship between ERV and Liberia's RGDP in the short-run, but variance decomposition analysis reveals that innovations to Liberia's RGDP lead to fluctuations in ERV in the long-run. Hence, we recommend that Liberia's policymakers should exert stronger monetary policy control to ensure the existence of single currency regime in the long-run. Also, technological innovation is required to boost domestic production in order to offset the negative effect of ERV on trade.

Keywords: Economic Growth; Exchange Rate Volatility; Liberia; Unrestricted Vector Autoregressive Model (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.econjournals.com/index.php/ijefi/article/download/4796/pdf (application/pdf)
https://www.econjournals.com/index.php/ijefi/article/view/4796/pdf (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-04-17

Access Statistics for this article

International Journal of Economics and Financial Issues is currently edited by Ilhan Ozturk

More articles in International Journal of Economics and Financial Issues from Econjournals
Bibliographic data for series maintained by Ilhan Ozturk ().