External Exchange Rate Research Articles

External Sector Variables, Exchange Rate and Industrial Sector Output Performance in Nigeria

This study examines the relationship between external sector variables, exchange rate and industrial sector output performance in Nigeria from 1980-2023 using the Ordinary Least Square analysis, the co-integration test and error correction mechanism. The study revealed the existence of a positive relationship between foreign direct investment and foreign port investment while a negative links exists between exchange rate and industrial capacity utilization on the industrial sector output performance in Nigeria within the period under consideration, 1980-2023. The error correction coefficient ECM (-1) value is -0.804506 or 80 per cent and correctly signed (negative sign) and significant. This implies that external sector variables, exchange rate and industrial sector output performance in Nigeria adjust speedily to the changes in the explanatory variables. Therefore, the ECM is able to correct and tie any deviations from the long –run relationship between industrial sector output performance and the explanatory variables to its short-run period.

External Debt and Exchange Rate in Egypt (1977-2022)”

External Debt and Exchange Rate in Egypt (1977-2022)”

The impact of external debt and exchange rate on foreign direct investment in emerging investment markets: new evidence using a PMG-ARDL panel data analysis

The impact of external debt and exchange rate on foreign direct investment in emerging investment markets: new evidence using a PMG-ARDL panel data analysis

The Impact of External Debt and Exchange Rate Volatility on Domestic Consumption in Sub-Saharan Africa

The Impact of External Debt and Exchange Rate Volatility on Domestic Consumption in Sub-Saharan Africa

The drivers of external debt in Ghana

PurposeThis paper aims to examine the factors that contribute to the external debt growth in Ghana.Design/methodology/approachThe study adopts the autoregressive distributed lag (ARDL) model and the error correction model (ECM) to establish the short-run and long-run relationships between the dependent variable (external debt) and the independent variables (debt service, exchange rate, gross domestic product, government expenditure, import and trade openness), using a time series data spanning from 1990 to 2019.FindingsThe results indicate that debt service, GDP, government expenditure and trade openness have a positive and significant relationship with external debt, while import and exchange rates have a negative relationship with external debt in the long run. In the short run, debt service, import, exchange rate and trade openness have a positive and significant relationship with external debt, while GDP has a negative relationship with external debt.Practical implicationsThe study found that variables such as government expenditure, debt service and import contribute significantly to the nation’s external debt stock. These findings suggest that policymakers should focus on prioritising and cutting down expenditure in their quest to curtail the debt menace facing the nation. Since existing debt service has the tendency of influencing debt stock, it is recommended that government should reduce borrowing in order avoid debt trap. Home-grown policies to reduce imports must also be encouraged. As these drivers of external debt are tackled head-on, Ghana can be rightly positioned to record lower levels of public debt and subsequently reap the benefits of economic growth.Originality/valueThe study adds to the public debt literature, specifically addressing the idiosyncratic determinants of external debt within the Ghanaian context.

Assessing the Impact of Rule of Law, External Debt, and Exchange Rate Volatility on Domestic Consumption in SAARC Countries

This paper investigates the relationship between rule of law, exchange rate volatility, external debt, and domestic consumption in SAARC countries from 1995 to 2022. Using a panel dataset, the study employs a random effects model to analyze the associations. Findings reveal that inflation rate, GDP growth, exchange rate, and rule of law positively link with domestic consumption, while external debt, interest rate, and exchange rate volatility exhibit negative associations. Granger causality analysis indicates that external debt granger causes exchange rate volatility, and there is bidirectional causality between domestic consumption and both external debt and exchange rate volatility. The study also suggests some policies to affect domestic consumption.

Dynamic Relationship Between External Debt, Inflation, and Exchange Rate in Lao PDR

This study investigates the dynamic relationship between external debt, inflation rate, and the exchange rate of the Lao Kip (LAK) against the US dollar over the period of 2000 to 2021. Utilizing time series data and the Autoregressive Distributed Lag (ARDL) Model, we analyze the impacts of these economic variables in both the short and long run. Our estimation results reveal a significant long-term positive relationship between external debt and the inflation rate with the exchange rate. Inflation rate and external debt have a significantly positive impact on exchange rate in the long run, while short-term analysis indicate a negative relationship between external debt and the inflation rate with the exchange rate. economic shocks or short-term fluctuations may disrupt the exchange rate, the system has a strong tendency to return to its long-term equilibrium point at a brisk pace. The policy implications are discussed. Therefore, policymakers must maintain a stable and controlled inflation environment. Inflation targeting and other monetary policy measures can be utilized to ensure that inflation remains within a manageable range. Keeping inflation under control can help stabilize the exchange rate and safeguard the country's economic stability.

Monetary policy frameworks since Bretton Woods, across the world and its regions

The Comprehensive Monetary Policy Framework (CMPF) project, which considers de jure and de facto, domestic (money, inflation) and external (exchange rate), monetary policy targets, has now classified 186 countries/currency areas from 1974 to 2017. This means that it is now possible to track the evolution of monetary policy frameworks across the world and its regions. This paper outlines the methodology of the classification and analyses the trends at global, regional and sub-regional levels.

Long-Term and Short-Term Impact of External Debt on Economic Growth in Laos: An ARDL Model Analysis

This study investigates the impact of external debt on the economic growth of Laos, with a specific focus on the evolving structure of external debt in the country spanning 1995 to 2020. It employs an Autoregressive Distributed Lag (ARDL) model to establish long-term cointegration among key economic variables. The variables under scrutiny include human capital, labor force participation, external debt, inflation, and exchange rates, which are analyzed for their roles in shaping economic growth in Laos. In the long term, the study identifies robust and statistically significant relationships. Notably, human capital and the labor force emerge as influential drivers of economic growth, with coefficients of 2.0594 and 0.0591, respectively. Conversely, there is a substantial negative correlation between the external debt ratio per GDP and inflation rate with economic growth. This indicates that increases in these variables are associated with diminished economic expansion over time. In the short term, the study reveals that human capital and labor force participation positively impact Laos' economic growth. In contrast, the short-term effects of the external debt ratio, inflation rate, and exchange rate are adverse, indicating potential economic challenges that need to be addressed promptly. Based on findings, this study provides valuable insights into the determinants of economic growth in Laos, both in the long and short terms. These findings can inform policymakers and researchers in the development of more effective economic strategies, taking into account Laos' unique economic context.

Public Debt and Exchange Rate Stability in Nigeria: An Empirical Analysis

This study examined public debt and its effect on exchange rate stability in Nigeria from 1980 to 2019. The data were subjected to statistical analysis using vector autoregression model. Using data on external and domestic debt servicing ratio to total debt stock, the findings showed no significant relationship between public debt and exchange rate stability in Nigeria within the period, likewise for ratio of external debt servicing to total external debt stock and exchange rate. Finally, domestic debt servicing had no significant relationship with exchange rate. The study concluded that as Nigeria increases external debt servicing, domestic prices increases and this also affects exchange negatively. It is recommended that concerted effort be intensified towards decreasing the level of external debt profile of Nigeria which will invariably decrease external debt servicing. Also, government should intensify revenue drive through exploring other viable sources that do not have repayment plan rather than relying on augmenting yearly budget through public debt accumulation. Keywords: Public Debt, Exchange Rate, Economic Stability, External Debt Servicing Ratio, Nigeria Economy.

Analysing External Debt Impact on Human Capital Development in Nigeria

Underdeveloped economies like Nigeria have always battled with human capital and economic development challenges orchestrated by poor and insufficient capital to embark on investment purposes. We know that economists have always supported that investment for production trigger economic activities leading to massive developments. This desire for economic developments have over the years triggered persistent scramble for foreign or international capital by underdeveloped economies and this has remained very contemporary. It therefore becomes imperative to analyse the impact that international capital has on human capital development of underdeveloped economies like Nigeria, with emphasis on External debt which is noted to be the commonest form and most favoured form of international capital for underdeveloped economies. Various studies that attempted to analyse the nexus came up with conflicting and or mixed findings. This study aims at disaggregating the impact of external debt on human capital development. The researcher has proxied ED with External debt stock (EDSK), External debt servicing (EDS), Exchange rate (EXR), Interest rate (ITR) and Inflation rate (IFR). The main objective of this study is to analyse the effect ED on human capital development (HCD) in Nigeria. The specific objectives are to explore, determine, assess, examine and ascertain the effect of EDSK, EDS, EXR, ITR and IFR on HCD. The study adopted ex-post facto research design and sourced data from the Central Bank of Nigeria Statistical Bulletin and Annual Reports and the World Bank Development Indicators were analyzed using Descriptive Statistics, Augmented Dicker Fuller tests for unit roots and Autoregressive Distributive Lag (ARDL) for the hypothesis. The study found no long run effect of ED on HCD in Nigeria but the existence of a positive and significant short run effect on HCD in Nigeria. It is recommended that External debt should be contracted solely for short term in

MODELING THE IMPACT OF EXTERNAL RESERVES ON ECONOMIC GROWTH IN NIGERIA: AN APPLICATION OF AUTOREGRESSIVE DISTRIBUTED LAG

The article investigates the effect of foreign exchange reserves on Nigerian economic growth from 1970 and 2022. The methodology used to confirm the presence of a correlation between Nigeria’s external reserves and economic growth was the Autoregressive Distributed Lag Model Bounds Test and Error Correction Model. It was revealed that an increase in the gross domestic product was positively and significantly correlated with external reserve. The findings suggest that, over the long term, Nigeria’s external reserve, currency rate, export, import, and money supply all have a significant and beneficial impact on the country’s gross domestic product growth. However, during the study period, import, money supply, and export had more positive effects on GDP growth than external reserve and exchange rate. At a 5% level, the coefficients are statistically significant. These findings have a key consequence that external reserves are crucial for economic growth in Nigeria since they have a positive and significant link with both short- and long-term GDP growth. Given that these macroeconomic indicator variables have a large impact on GDP development, the government and other relevant organizations should develop policies that would help Nigeria increase its external reserve and achieve a stable and favorable exchange rate. Government, however, ought to concentrate on maximizing reserve building. As a result, optimal reserve is recommended in relation to the shocks the economy will experience and the debt’s existing value. The accumulation of reserves makes it necessary to pay for the importation of goods and services, infrastructural needs, agricultural needs, servicing of the country’s external debt, and financing domestic fiscal expenditure. As a result, optimal reserves will balance both economic growth and external reserves.

Effect of Government Debt on the Growth of Nigerian Economy: An Econometric Approach

This study examined the effect of government debt on the growth of the Nigerian economy. The study was specifically meant to access the extent to which external debt, domestic debt and exchange rate relate with the growth of the Nigerian economy. To achieve these objectives, an ex-post facto research design was adopted for the study. Time series data was collected from the CBN Statistical Bulletin and the National Bureau of statistics for the period 1990 to 2021 using the desk survey approach. The data were analyzed using the ordinary least square multiple regression statistical technique and the correlation matrix. Results from the analysis revealed that external debt had a negative but significant effect on the growth of the Nigerian economy. Also, the study showed that exchange rate and domestic debt had positive and significant effect on economic growth in Nigeria. Based on these findings, it was recommended that funding through government external borrowing should be minimized and allocated for funding long term viable capital project. Also it will boost the level of the economy into growth and generate sufficient returns required to service the debt. Also, borrowed funds should be invested by government in providing an enabling environment to promote the export base of the country and reduce the over reliance on importation of consumables and industrial raw materials.

GLOBALISATION, NATIONAL DEVELOPMENT, CHALLENGES AND WAY FORWARD: THE NIGERIAN PERSPECTIVE

The paper examines the effect of globalisation on development in Nigeria from 1981-2021. Auto-regressive distribution lags model (ARDL) based on the Unit root test was used to determine the effect of three major factors; Degree of Openness (DO), External reserve (ER) and Exchange rate (EXCR) on real gross domestic product (RGDP) which proxies’ economic growth. Findings from empirical results reveal that external reserves, exchange rates and other related variables considered for the analysis jointly had insignificant effect on economic growth in Nigeria during the period under review, implying that external reserves rate and exchange rate are an important determinant of productivity in Nigeria. The real Gross Domestic Product is the dependent variable proxied by economic growth. The result shows that there is positive and significant impact of ER while DO and EXR have negative impact on economic growth in Nigeria. The study therefore recommended that, government should provide enabling macroeconomic environment particularly right foreign policies in place in terms of providing policies that will boast the local production in order to increase output to cushion effects of high cost of the goods and services as well as increase forex supply to maintain stability of the exchange rate.

Analysing the Incidence of External Debt Stocks and Exchange Rate Fluctuations on Economic Growth in Nigeria

The overdependence of Nigeria on external borrowing to finance capital projects amidst persistent fluctuations in exchange rate had posed challenges for economic growth in Nigeria. This study analysed the impact of external debt stock and exchange rate fluctuations on economic growth. Time series data on the variables were sourced from the world development index and the Central Bank of Nigeria from 1981-2021. The outcome of Zivot-Andrews indicated that all variables were integrated of order I(1), the Johansen cointegration confirmed the existence of long run relationship among the variables. The study found from the analysis of structural VAR that external debt stock and external debt service had significant negative impact on economic growth in Nigeria while exchange rate fluctuations positively impact on economic growth. However, the analysis of the transmission effect revealed that external debt stock negatively affects economic growth through exchange rate volatilities. The study therefore recommended borrowing to finance only capital projects and not recurrent expenditures, and the execution of these projects should be paid in domestic currencies to increase demand for naira.

Study on the Impact of Stock Market Performance on REITs Market in China

China's real estate trust business started in 2002, and has experienced four stages: germination, stagnation, pilot operation and practical development. In the financial market, the stock market will directly reflect the macroeconomic factors represented by monetary policy, external financial market, interest rate and exchange rate, and have an impact on REITs through the secondary market. With the development of China's domestic REITs market, to evaluate the risk impact of the REITs market more accurately and form a stable risk early warning and prevention mechanism is quite important. This paper expounds the basic connotation and main characteristics of real estate investment trust, through the TVP-VAR model, analysis of the mainland REITs influenced by the stock market, it is concluded that the domestic stock market responds directly to the domestic and international monetary policy, and through the stock market to REITs market, and the effect time is mainly short-term, but the impact effect is more obvious.

Does Public Debt Determine Economic Growth; Evidence from Nigeria

The study examined the impact of public debt on economic growth of Nigeria with data captured from 1990-2020. Real Gross Domestic Product Growth Rate formed the dependent variable while external debt, domestic debt, exchange rate, inflation and interest rate are the independent variables. The study adopted Ex-post facto research design and also employed Ordinary Least Square analytical method. The findings of the study revealed that external debt had a positive and significant relationship with the real gross product growth rate, internal debt had a positive and significant relationship with the real gross product growth rate and that there was a uni-directional causality relationship between real gross product growth rate and external debt. The study therefore recommended that government should professionally manage the nations rising debt profile so as to avoid future debt trap, they should influence increase in local productivities and access to local financial facilities more and that they should also ensure stable exchange rate value of Naira.

External Debt and Real Exchange Rate Volatility in South Asia

This study empirically examines the mechanism that connects debt accumulation to exchange rate volatility through the lens of important macroeconomic variables in South Asian Countries. One of the most influential explanatory factors behind exchange rate volatility is deemed as the flow of external debt for these countries. Using data from the World Development Indicators for the period 1980–2020, it is shown that external debt increases exchange rate volatility, significantly. The model is identified via panel Granger tests for relevant variables, estimated for a wide range of covariates and tested for all possible sources of endogeneity via subsequent robustness analyses. JEL Classification: C33, F31, H6, O53

Determinants of Capital Flight and its Impact on Economic Performance: A Study of Developing Economies

Capital flight imposes a great danger to the developing economies by lowering their economic activity, devaluing the currency, and hindering growth. This paper contributes to the literature by investigating the determinants of capital flight of developing economies. Determinants are studied as indices, and these indices are calculated by using the Arithmetic Mean approach. There is a two-step model; in the first part,determinants are discussed, and in the second part, capital flight is used as an independent variable, and its impact on economic performance is measured in 57 Developing Economies. GMM (Generalized Method of Moments) is used for the determinants of capital flight, and panel GLS (Generalized least square) is used to check the impact of capital flight on economic performance. Macroeconomic variables (external debt, inflation, exports, interest rate, and exchange rate) are also part of the study with four indices as determinants (Country Risk Index, Economic Freedom Index, financial inclusion index, and Governance institution and corruption index). Results suggested that all included indices are significant along with all macroeconomicvariables. Country risk, external debt, and exports have a negative coefficient, and othershave a positive coefficient value. Capital investment, foreign direct investment, and Gross domestic product are used as proxies of economic performance. Results of GLS have shown there is a significant and negative impact of capital flight on economic performance. Capital flight is measured by using the residual methodology.

External and internal exchange rates and the Dutch disease: Evidence from a panel of oil-exporting African countries

Despite an increasing number of empirical studies on the Dutch disease in developing countries and the evidence that oil revenues tend to appreciate the real exchange rate, there are very few existing discussions about the definition of real exchange rates. This article intends to fill this gap by using different proxies of the real exchange rate and differentiating the internal and external real exchange rates for the agricultural and manufacturing sectors. Using Pooled-Mean-Group and Mean-Group estimates on a panel of nine African net oil-exporting countries, results show a clear appreciation of the exchange rates generated by an increase in oil revenues or international oil prices, except for the internal real exchange rate for manufacturing goods. This could imply that, in these African countries, oil revenues affect the competitiveness of agricultural sectors more clearly than the manufacturing ones. This article also tests potential cross-section dependence by implementing a Cross-sectionally augmented version of the Pooled-Mean-Group, which overall supports the previous results.