Determinants of exchange rate threshold effect on economic growth. Evidence from Ghana

IF 1.4 Q3 ECONOMICS
David Mensah Awadzie, Edward Attah-Botchwey, Bright Gabriel Mawudor
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引用次数: 0

Abstract

Purpose

The exchange rate is an important driver of a country’s economic growth, influencing trade, investment, inflation, and employment. This study’s main objective was to investigate the threshold effects of exchange rates on economic growth.

Design/methodology/approach

In this research, innovative endogenous threshold autoregressive (TAR) models introduced by Hansen (2000) are employed for estimation and inference. The dataset comprises secondary annual time series data from Ghana, covering thirty-one years from 1990 to 2021. Economic growth is represented by GDPPC, with the growth exchange rate serving as the crucial threshold variable.

Findings

The finding suggests a single exchange rate threshold for Ghana, indicating a nonlinear relationship with economic growth. However, above 8.97%, the exchange rate considerably slows growth, harming the economy. The exchange rate negatively influences growth in both low and high-exchange-rate regimes, but it is insignificant in the high regime. In addition, inflation has a significant negative influence on growth in the low regime but a positive impact on the high regime. In contrast, interest rates positively impact growth in both regimes, though not as significantly in the high regime.

Practical implications

The findings from this study offer valuable insights to the Ghanaian government and policymakers as they consider choosing an exchange rate target that helps minimise the negative impact of a high exchange rate to promote economic growth.

Originality/value

This paper is remarkable for being one of the few studies that have explored the relationship between exchange rates and economic growth, exploring the threshold effect.

汇率阈值效应对经济增长的决定因素。加纳的证据
目的汇率是一国经济增长的重要驱动力,影响着贸易、投资、通货膨胀和就业。本研究的主要目的是探讨汇率对经济增长的门槛效应。本研究采用 Hansen(2000 年)提出的创新性内生门槛自回归(TAR)模型进行估计和推断。数据集包括加纳从 1990 年到 2021 年 31 年的二级年度时间序列数据。经济增长由 GDPPC 表示,增长汇率作为关键的临界变量。然而,如果汇率超过 8.97%,经济增长就会明显放缓,从而损害经济。在低汇率制度和高汇率制度下,汇率都会对经济增长产生负面影响,但在高汇率制度下影响并不显著。此外,通货膨胀对低汇率制度下的经济增长有显著的负面影响,但对高汇率制度下的经济增长有正面影响。相比之下,利率对两种制度下的经济增长都有积极影响,但在高汇率制度下影响并不显著。 本研究的结论为加纳政府和政策制定者提供了宝贵的见解,因为他们正在考虑选择一个汇率目标,以帮助最大限度地减少高汇率的负面影响,从而促进经济增长。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
3.20
自引率
7.70%
发文量
41
期刊介绍: African Journal of Economic and Management Studies (AJEMS) advances both theoretical and empirical research, informs policies and practices, and improves understanding of how economic and business decisions shape the lives of Africans. AJEMS is a multidisciplinary journal and welcomes papers from all the major disciplines in economics, business and management studies.
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