Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia
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)....
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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EconJournals
2017-07-01
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| Series: | International Journal of Economics and Financial Issues |
| Online Access: | https://www.econjournals.com/index.php/ijefi/article/view/4796 |
| _version_ | 1797911572629159936 |
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| author | Abimelech Paye Gbatu Zhen Wang Presley K. Wesseh Jr. Isaac Yak Repha Tutdel |
| author_facet | Abimelech Paye Gbatu Zhen Wang Presley K. Wesseh Jr. Isaac Yak Repha Tutdel |
| author_sort | Abimelech Paye Gbatu |
| collection | DOAJ |
| description |
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 VAR model
JEL Classifications: E31, E32, E52
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| first_indexed | 2024-04-10T11:42:42Z |
| format | Article |
| id | doaj.art-2b579c3e77b048d79d037c1b715aa879 |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T11:42:42Z |
| publishDate | 2017-07-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-2b579c3e77b048d79d037c1b715aa8792023-02-15T16:17:27ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382017-07-0174Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in LiberiaAbimelech Paye Gbatu0Zhen Wang1Presley K. Wesseh Jr.2Isaac Yak Repha Tutdel3Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, ChinaAcademy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, ChinaChina Center for Energy Economics Research, College of Economics, Xiamen University, Xiamen 361005, ChinaAcademy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China 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 VAR model JEL Classifications: E31, E32, E52 https://www.econjournals.com/index.php/ijefi/article/view/4796 |
| spellingShingle | Abimelech Paye Gbatu Zhen Wang Presley K. Wesseh Jr. Isaac Yak Repha Tutdel Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia International Journal of Economics and Financial Issues |
| title | Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia |
| title_full | Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia |
| title_fullStr | Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia |
| title_full_unstemmed | Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia |
| title_short | Causal Effects and Dynamic Relationship between Exchange Rate Volatility and Economic Development in Liberia |
| title_sort | causal effects and dynamic relationship between exchange rate volatility and economic development in liberia |
| url | https://www.econjournals.com/index.php/ijefi/article/view/4796 |
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