Does Nominal Devaluation Precede Real Devaluation? The Case of The Philippines

Wahid, Abu N. M.; Shahbaz, Muhammad

doi:10.1007/s11300-009-0052-7

Cited by 10 publications

(6 citation statements)

References 49 publications

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“…The results indicate that nominal devaluation has a positive effect on real devaluation in Laos. The same results were reached by Wahid and Shahbaz (2009) in the Philippines, Shahbaz (2009) in Pakistan, Shahbaz and Salahuddin (2009) in Ghana and Rena, Shahbaz, and Hye (2009) in Papua New Guinea. Based on the results, the nominal devaluation leads to real devaluation not only in the long run but also in the short run.…”

Section: Review Of Literaturesupporting

confidence: 56%

Comparing the Relationship Between Nominal and Real Effective Exchange Rates During the Last Two Devaluations in Algeria

Boubellouta

Shahbaz

2019

Global Business Review

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This article examines the impact of nominal effective exchange rate on real effective exchange rate in Algeria, using autoregressive distributed lag bounds test approach with monthly time series data from 2008 to 2017. Empirical results suggest that the nominal devaluation leads to real devaluation not only in the long run but also in the short run in Algeria for both devaluations. But all coefficients estimated for the second devaluation are low compared to the first devaluation. Our analysis shows that reducing the import through devaluation of the dinar led to a significant increase in import prices. However, the present study shows that taking into account all of the structural problems of the Algerian economy, the devaluation of the dinar may lead to more severe inflation than anticipated by the Algerian government.

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Section: Review Of Literaturesupporting

confidence: 56%

Comparing the Relationship Between Nominal and Real Effective Exchange Rates During the Last Two Devaluations in Algeria

Boubellouta

Shahbaz

2019

Global Business Review

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“…Lastly and importantly, for improvement in trade balance, nominal devaluation should lead to real exchange rate devaluation or depreciation. The notion that real devaluation proceeds nominal devaluation finds empirical support as well (Vaubel 1976;Bruno 1978;Connolly and Taylor 1979;Edwards 1994;Kent and Naja 1998;Holmes 2004;Wahid and Shahbaz 2009). Interestingly, Shahbaz (2009) concludes this result for Pakistan.…”

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confidence: 86%

Structural Decomposition of Exchange Rate Shocks in Pakistan: An Empirical Investigation using SVAR Methodology

Nasir

Malik

2011

Transit Stud Rev

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“…Kent and Naja (1998) Shahbaz (2009) also confirmed that nominal devaluation leads real devaluation over the 1975Q1-2006Q4 in case of developing economies like Pakistan. Similarly, Wahid and Shahbaz, (2009) suggest that not only in the long run, but also in the short run, nominal devaluation does escort to real devaluation in the case of Philippines. Wahid and Shahbaz, (2008) documented that not only in the long run, but also in the short run, nominal devaluation steer to real devaluation in case of Bangladesh.…”

Section: Literature Reviewmentioning

confidence: 97%

Does Nominal devaluation Precede Real Devaluation in Flexible Exchange Rate Regime? A Case Study of Papua New Guinea

Rena

Shahbaz

Hye

2009

Asia Pacific Business Review

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Economy can be pretentious by the progression of devaluation or depreciation of local currency either positively or negatively. The improvement in trade balance is considered as one of the significant and beneficial impacts occurring on account of devaluation by means of an increase in the volume of exports while lessening in the volume of imports. However, higher inflation would lead to expensive imports that offset the growth of economy resulting from increase in the exports. This reduces the effectiveness of devaluation in bringing down trade deficit. The benefits of devaluation are restricted where inflation severely hits the economy. Moreover, nominal devaluation improves the trade balance when it leads to real devaluation. The relationship between nominal and real effective exchange rates is explored in the present hypothesis. The study is a unique attempt in the case of Papua New Guinea as devaluation has always been a politically sensitive issue. In this paper investigation, regarding “whether nominal devaluation precedes the real devaluation or not” both in the long run as well as in short span of time is done. The order of integration has been found through Ng-Perron, whereas ARDL, Co-integration Johansen Test and DOLS are employed for long run correlations. The findings of the paper clearly indicate the fact that nominal devaluation not only does lead to real devaluation in long span of time but also in the short run. This scenario provides directions for policy-makers to take into consideration both positive and negative implications of devaluation in Papua New Guinea.

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Does Nominal Devaluation Precede Real Devaluation? The Case of The Philippines

Abstract: Devaluation, Unit root, Co-integration, F10, C20, C22,

Cited by 10 publications

References 49 publications

Comparing the Relationship Between Nominal and Real Effective Exchange Rates During the Last Two Devaluations in Algeria

Comparing the Relationship Between Nominal and Real Effective Exchange Rates During the Last Two Devaluations in Algeria

Structural Decomposition of Exchange Rate Shocks in Pakistan: An Empirical Investigation using SVAR Methodology

Does Nominal devaluation Precede Real Devaluation in Flexible Exchange Rate Regime? A Case Study of Papua New Guinea

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