The Effects of the Real Exchange Rate Volatility and Misalignments on Foreign Trade Flows in Uzbekistan

<abstract> <p>The relationship between real exchange rate volatility and the trade balance has been a contentious issue since the fall of Bretton woods agreement of 1973, owing to the lack of unanimity on the effect. This article provides empirical evidence of the link between the real exchange rate volatility and the trade balance in the light of financial development, confirming the assertion that the effect is significantly dependent on the country's level of financial development. Due to Nigeria's relatively undeveloped financial system, its exchange rate dampens the country's exports. Rather than studying the relationship in isolation, we examine the moderating role of financial development on the link between export and the real exchange rate volatility in this paper. The empirical estimation is based on the Nigeria's data set spanning the years 1980–2019, and it employs threshold autoregressive non-linear co-integration and non-linear ARDL estimation techniques. According to the findings, financial development magnifies the beneficial benefits of the real exchange rate on Nigeria's foreign trade. It also states that the uncertainty in foreign capital flows has a negative impact on Nigeria's international trade. The findings have broad policy implications, implying that in order to diversify and improve the economy's future growth and associated international trade, Nigeria's policymakers should promote adequate financial sector development, as financial shocks are amplified by poorly implemented credit markets.</p> </abstract>

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THE RESPONSE OF ZIMBABWE TOBACCO EXPORTS TO REAL EXCHANGE RATES VOLATILITY

Journal of Agribusiness and Rural Development ◽

10.17306/j.jard.2020.01241 ◽

2020 ◽

Vol 56 (2) ◽

Author(s):

Knowledge Mutodi ◽

Tinashe Chuchu ◽

Eugine Tafadzwa Maziriri

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Real Exchange Rate ◽

Real Exchange Rates ◽

Exchange Rate Volatility ◽

Response Model ◽

The Real ◽

Long Run ◽

Exchange Rates Volatility ◽

Real Exchange Rate Volatility

The focus of this study was on investigating the response of tobacco exports to real exchange rates and real exchange rate volatility and other factors in Zimbabwe using secondary data spanning from 1980 to 2019. Bilateral nominal exchange rates and time-variant weights of Zimbabwe’s 10 major trading partners were calculated and used to compute the real exchange rate index. The time-dependent weighting system was used to better represent the evolution of trade patterns in the index. The arithmetic method was employed for computing the index. Generalized autoregressive conditional heteroskedasticity (GARCH) and autoregressive conditional heteroscedasticity (ARCH) models were used to generate the real exchange rate volatility index. The export response function was adopted as the tobacco exports response model. The variables in the tobacco exports response model were the realworld Gross Domestic Product (GDP), real exchange rate, terms of trade, real exchange rate volatility and dollarization. A vector error correction model (VECM) was used to estimate the response of tobacco exports to real exchange rate, real exchange rate volatility and other factors. The VECM results indicated that real world GDP was insignificant in both the short and long run. In the long run, the real exchange rate appreciation had a negative impact on tobacco exports. Conversely, in the short run, the depreciation of real exchange rate had a positive impact on tobacco exports. Hence, the government has to adopt other mechanisms that reduce uncertain movements of exchange rates.

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Elections and The Real Exchange Rate Volatility In Turkey (1992-2014)

International Conference on Eurasian Economies 2016 ◽

10.36880/c07.01553 ◽

2016 ◽

Author(s):

Cevat Gerni ◽

Özge Buzdağlı ◽

Dilek Özdemir ◽

Ömer Selçuk Emsen

Keyword(s):

Exchange Rate ◽

Real Exchange Rate ◽

Exchange Rate Regime ◽

Exchange Rate Volatility ◽

The Real ◽

General Elections ◽

The Impact ◽

Political Variables ◽

Ruling Party ◽

Real Exchange Rate Volatility

Sudden fluctuations that occur as results of politicians’ manipulation on the macroeconomic variables during the election period are called as Political Business Cycle. In recent years, exchange rate also has become an important subject of many studies in this framework. Before the elections, to gain the public’s votes, politicians firstly put pressure on the exchange rates to prevent currency depreciation, and then this can lead to manipulative fluctuations. In this respect, during the 1992:01-2014:12 periods in Turkey, the impact of the entire local and general elections on the real exchange rate volatility is examined using E-GARCH method. On the other hand, political variables such as independence of Central Bank, exchange rate regime, the number of representatives of the ruling party in the parliament and coalition are included to the model while the pre and after election period from the 1st to the 6th month as dummy variables. Based on the results of the analysis, it can be said that the elections and the political variables affect the real exchange rate and its volatility in Turkey. However, there is no significant evidence whether the politicians act opportunistic behavior to be reelected. Since the uncertainty during the election period cause outflow of the capital and deferral of the investment decisions of the investors until after the election, it may well be said that the politicians fail to influence the real exchange rate for their self-interests.

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The Dynamic Behavior of the Real Exchange Rate in Sticky Price Models: Comment

The American Economic Review ◽

10.1257/aer.104.3.1072 ◽

2014 ◽

Vol 104 (3) ◽

pp. 1072-1089 ◽

Cited By ~ 8

Author(s):

Jens Iversen ◽

Ulf Söderström

Keyword(s):

Exchange Rate ◽

Real Exchange Rate ◽

Dynamic Behavior ◽

Model Calibration ◽

Impulse Response Function ◽

Exchange Rate Volatility ◽

American Economic Review ◽

The Real ◽

Real Shocks ◽

Real Exchange Rate Volatility

In an article published in the American Economic Review, Jón Steinsson (2008) argues that two sticky price models driven by real shocks can explain the observed persistence, volatility, and hump-shaped impulse response function of the real exchange rate. This comment shows, first, that correcting an error in one of Steinsson's models leads to substantially lower persistence and volatility of the real exchange rate; second, that Steinsson's models cannot match real exchange rate volatility relative to output; and, third, that reasonable variations of the model calibration or specification all lead to lower real exchange rate persistence and volatility (or both). (JEL F41, F44, E52)

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