Abstract
Abstract This paper attempts to identify the factors that influence parallel exchange rate premium in Sudan during the period 1979–2014. In addition, the impact of parallel exchange rate premium on economic performance is examined; focusing on three key macroeconomic indicators namely, economic growth, inflation and exports. The empirical results show that parallel exchange rate premium is significantly affected by policy variables such as, real exchange rate, trade openness and money supply. The results also reveal that GDP growth, expected rate of devaluation, budget deficit and foreign aid are the most significant factors affecting parallel exchange premium. Moreover, the results demonstrate that parallel premium has a detrimental impact on both economic growth and export performance. Expectedly, the results show a positive association between premium and inflation rate. These outcomes are still hold under robustness checks, indicating that parallel exchange rate premium has negative consequences on macroeconomic performance in Sudan. Accordingly, the paper concludes with some policy implications that aim to narrow the spread between the black and official exchange rate as an important way out to contain inflationary pressures, improve export competitiveness, and boost economic growth. Keywords : Parallel exchange rate premium, macroeconomic performance, ARDL, Sudan JEL Classification : C3, F3, F4
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
