Abstract
AbstractThe kwacha/US$ exchange rate has fluctuated widely with large changes attributed to the copper price booms and bursts due to the significant contribution of copper to the Zambian economy. Accordingly, the estimation results conducted in the cointegration framework over the period 1994q1–2012q4 reveal the existence of a long‐run equilibrium relationship between the real copper price and real kwacha/US$ exchange rate. These empirical results signify the importance of closely monitoring underlying developments in the copper price in order to design appropriate policy response to ensure that impulses to the copper price do not undermine the external competitiveness of the economy. Copyright © 2015 John Wiley & Sons, Ltd.
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