Renewable Energy Consumption in Somalia: Assessing Its Impact on Currency Exchange Rates

Iqra Hassan Mohamud, Zakarie Abdi Warsame, Ahmed Abdirashid Mohamud, Abas Mohamed Hassan and Ibrahim Hassan Mohamud
Additional contact information
Iqra Hassan Mohamud: Faculty of Management Sciences, SIMAD University, Mogadishu, Somalia
Zakarie Abdi Warsame: Faculty of Economics, SIMAD University, Mogadishu, Somalia
Ahmed Abdirashid Mohamud: Faculty of Accountancy, SIMAD University, Mogadishu, Somalia
Abas Mohamed Hassan: Faculty of Management Sciences, SIMAD University, Mogadishu, Somalia
Ibrahim Hassan Mohamud: Faculty of Management Sciences, SIMAD University, Mogadishu, Somalia

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 6, 222-229

Abstract: This study utilizes an Autoregressive Distributed Lag (ARDL) model to examine the effects of renewable energy, economic growth, and inflation rate on exchange rate fluctuations in Somalia from 1990 to 2019. The analysis shows that economic growth and RE positively influence the exchange rate in both the short and long run. In contrast, inflation negatively impacts the exchange rate in the short run, suggesting short-term currency appreciation, but leads to depreciation in the long term. Moreover, the study finds that a 1% increase in RE results in an 80% increase in the exchange rate, indicating significant currency depreciation. To mitigate currency depreciation, the research advocates for policies promoting local renewable energy use to reduce import dependency and stabilize the currency. This approach includes investments in renewable infrastructure, community education, and economic diversification. This study highlights the need for further research into renewable energy’s impact on exchange rates in Somalia, particularly in different economic contexts, to gain a more holistic understanding of these dynamics.

Keywords: Renewable Energy; Economic Growth; Inflation Rate; Exchange Rate; Somalia (search for similar items in EconPapers)
JEL-codes: E31 F31 P28 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econjournals.com/index.php/ijeep/article/download/15699/8308 (application/pdf)
https://www.econjournals.com/index.php/ijeep/article/view/15699 (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:journ2:2024-06-22

Access Statistics for this article

International Journal of Energy Economics and Policy is currently edited by Ilhan Ozturk

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