The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach
This paper investigates the impact of dollarization policy on Zimbabwe exports over a period of 20 years. The study used panel data for 50 Zimbabwe potential historical trading partners. Random Effects Model (REM) was applied to estimate the gravity model equation. Panel Feasible Generalized Least...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
EconJournals
2021-05-01
|
| Series: | International Journal of Economics and Financial Issues |
| Online Access: | https://econjournals.com/index.php/ijefi/article/view/11315 |
| _version_ | 1797908354872377344 |
|---|---|
| author | Lilian Tomu Knowledge Mutodi Tinashe Chuchu Eugine Tafadzwa Maziriri |
| author_facet | Lilian Tomu Knowledge Mutodi Tinashe Chuchu Eugine Tafadzwa Maziriri |
| author_sort | Lilian Tomu |
| collection | DOAJ |
| description |
This paper investigates the impact of dollarization policy on Zimbabwe exports over a period of 20 years. The study used panel data for 50 Zimbabwe potential historical trading partners. Random Effects Model (REM) was applied to estimate the gravity model equation. Panel Feasible Generalized Least Squares (FGLS) regression technique corrected for heteroskedasticity and contemporaneous correlation across panels was applied to probe factors that drive Zimbabwe export flows. The results provide insights on the impact of dollarization policy, GDP, bilateral exchange rate, SADC membership status and population on Zimbabwe exports. If monetary authorities involuntarily re-dollarize the economy owing to monetary autonomy erosion, emphasis should be directed towards internal devaluation which could be attained by measures intended to exert downward pressure on domestic costs, wages and prices to recuperate export competitiveness. Further, government has to create an environment that encourage foreign direct investment inflows to ease liquidity challenges probable to be experienced under dollarization regime. Nevertheless, macroeconomic fundamentals ought to be addressed with action to spur economic growth. Sufficient resources should be channelled towards increasing the country's productive capacity, and this can enhance country‘s ability to supply export products to the international market, and curb import growth.
Keywords: Dollarization policy, gravity model, Zimbabwe
JEL Classifications: F60, F63, 63
DOI: https://doi.org/10.32479/ijefi.11315
|
| first_indexed | 2024-04-10T10:51:25Z |
| format | Article |
| id | doaj.art-cecc07e452c547189d8254a5a5b17ffb |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T10:51:25Z |
| publishDate | 2021-05-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-cecc07e452c547189d8254a5a5b17ffb2023-02-15T16:20:07ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382021-05-011135202The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model ApproachLilian Tomu0Knowledge Mutodi1Tinashe Chuchu2Eugine Tafadzwa Maziriri3Department of MBA Hospital and Health Care Management Symbiosis Institute of Health Science Symbiosis International University, Pune, India.Department of Agricultural Business Development & Economics Faculty of Agriculture Environment and Food Systems University of ZimbabweUniversity of the WitwatersrandUniversity of the Free State This paper investigates the impact of dollarization policy on Zimbabwe exports over a period of 20 years. The study used panel data for 50 Zimbabwe potential historical trading partners. Random Effects Model (REM) was applied to estimate the gravity model equation. Panel Feasible Generalized Least Squares (FGLS) regression technique corrected for heteroskedasticity and contemporaneous correlation across panels was applied to probe factors that drive Zimbabwe export flows. The results provide insights on the impact of dollarization policy, GDP, bilateral exchange rate, SADC membership status and population on Zimbabwe exports. If monetary authorities involuntarily re-dollarize the economy owing to monetary autonomy erosion, emphasis should be directed towards internal devaluation which could be attained by measures intended to exert downward pressure on domestic costs, wages and prices to recuperate export competitiveness. Further, government has to create an environment that encourage foreign direct investment inflows to ease liquidity challenges probable to be experienced under dollarization regime. Nevertheless, macroeconomic fundamentals ought to be addressed with action to spur economic growth. Sufficient resources should be channelled towards increasing the country's productive capacity, and this can enhance country‘s ability to supply export products to the international market, and curb import growth. Keywords: Dollarization policy, gravity model, Zimbabwe JEL Classifications: F60, F63, 63 DOI: https://doi.org/10.32479/ijefi.11315 https://econjournals.com/index.php/ijefi/article/view/11315 |
| spellingShingle | Lilian Tomu Knowledge Mutodi Tinashe Chuchu Eugine Tafadzwa Maziriri The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach International Journal of Economics and Financial Issues |
| title | The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach |
| title_full | The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach |
| title_fullStr | The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach |
| title_full_unstemmed | The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach |
| title_short | The Impact of Dollarization Policy on Zimbabwe Exports: A Gravity Model Approach |
| title_sort | impact of dollarization policy on zimbabwe exports a gravity model approach |
| url | https://econjournals.com/index.php/ijefi/article/view/11315 |
| work_keys_str_mv | AT liliantomu theimpactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT knowledgemutodi theimpactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT tinashechuchu theimpactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT euginetafadzwamaziriri theimpactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT liliantomu impactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT knowledgemutodi impactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT tinashechuchu impactofdollarizationpolicyonzimbabweexportsagravitymodelapproach AT euginetafadzwamaziriri impactofdollarizationpolicyonzimbabweexportsagravitymodelapproach |