Does the equilibrium real exchange rate improve cocoa export performance?

Ridwan Mukaila

SN Business & Economics, 2023, vol. 3, issue 11, 1-21

Abstract: Abstract The exchange rate is a major driver of agricultural trade globally, and any change in it may influence exports. While several studies have shown the impact of exchange rate fluctuation on agricultural exports, the impact of maintaining the exchange rate at equilibrium on agricultural exports, especially cocoa, receives less attention. Based on this, this study examined whether maintaining the exchange rate at the equilibrium value, that is, the equilibrium real exchange rate, will improve cocoa exports. This study further examined the effects of exchange rate misalignment and some economic fundamentals on cocoa exports. Granger causality, autoregressive distributed lag model, and error correction model were used to analyse the data covering 1970 to 2021. This study found that the equilibrium real exchange rate positively influenced cocoa exports. However, exchange rate misalignments lower the volume and worsen the performance of cocoa exports. Thus, maintaining the exchange rate at equilibrium increased cocoa export volume, which, in turn, enhanced its performance. Furthermore, increases in trade openness, capital inflows, and terms of trade enhanced cocoa exports. These call for monitoring the exchange rate at equilibrium values and improving terms of trade and trade openness to enhance cocoa exports.

Keywords: Cocoa export; Equilibrium real exchange rate; Exchange rate misalignment; Trade openness; Term of trade (search for similar items in EconPapers)
JEL-codes: F13 F14 F31 Q17 Q27 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s43546-023-00574-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:snbeco:v:3:y:2023:i:11:d:10.1007_s43546-023-00574-6

Ordering information: This journal article can be ordered from
https://www.springer.com/journal/43546

DOI: 10.1007/s43546-023-00574-6

Access Statistics for this article

SN Business & Economics is currently edited by Gino D'Oca

More articles in SN Business & Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().