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      • KCI등재

        Real Exchange Rate and Manufacturing Export Competitiveness in Eastern Africa

        Fetene Bogale Hunegnaw 세종대학교 경제통합연구소 2017 Journal of Economic Integration Vol.32 No.4

        This paper investigates the effects of real exchange rates on manufacturing exports in 10 East African countries. The study uses pooled mean group and mean group estimators with an Autoregressive Distributed Lag procedure to analyze four classifications of manufacturing exports, unlike past studies that often examined aggregate exports by adopting traditional empirical methods subject to various shortcomings. Our results are more or less consistent with the standard theory. The elasticity is relatively low, except for low-skill manufacturing exports. In the short run, real exchange rate depreciation improves exports of labor-intensive, low-skill, and medium-skill technology-intensive manufacturing. In contrast, depreciation of the real effective exchange rate worsens high-skill technology-intensive exports. Another findings suggest that exchange rate devaluation matters for export performance in Eastern Africa. Nevertheless, the magnitude of this elasticity is low and remains below the findings for Sub-Saharan African and other developing countries. Positive and elastic manufacturing exports with respect to domestic real GDP shows the importance of economic growth to the performance of manufacturing exports. Therefore, policies aimed at boosting exports in the long term should aim to provide a conducive environment for economic growth prior to continuous devaluation of a domestic currency.

      • KCI등재

        The Role of Foreign Exchange Rates in Sub-Saharan Countries: Empirical Comparison with Non-Euro OECD Countries Using Panel Data

        Elias Sanidas,Fetene Bogale Hunegnaw 서울대학교 경제연구소 2017 Seoul journal of economics Vol.30 No.2

        The effect of devaluations on economies is one of the most controversial macroeconomic policies in Sub-Saharan Africa (SSA), both theoretically and empirically. This study uses panel data from 1995-2013 for 17 SSA countries and 17 non-Euro OECD economies. The main conclusion is that exchange rates devaluations and revaluations are an effective policy instrument in improving trade balances and boosting real output in both regions. There are some similarities in the results between the two groups of nations but also many differences, which are indicated in detail in the text. For example, regarding the estimation of trade balances directly, the income effects (own GDP and foreign GDP) and the exchange rates effect seem to be more important in the case of SSA group than in the case of the OECD group. There are also some policy implications. Thus, governments in SSA nations are encouraged to further pursue both exchange rates and monetary or fiscal policies; and as they develop their industries, they may rely more and more on floating exchange rates.

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