Exchange rate impact on output and inflation: A historical perspective from Zimbabwe

Mahonye, Nyasha; Zengeni, Tatenda

doi:10.1080/20421338.2019.1575539

Cited by 6 publications

(4 citation statements)

References 26 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Munthali et al (2010) embraced how real effective exchange rate shocks contribute to the GDP of Malawi and found a negative and statistically significant correlation between these variables. Mahonye and Zengeni (2019) suggested, in a study on the influence of variations in the exchange rate on inflation and its attendant implications on economic growth for Zimbabwe, that real exchange rate devaluation for the country could be inflationary and that the move has the tendency of encouraging exports and, consequently, boosting economic performance in the country. This is an argument that is neither here nor there about the relationship between the country's exchange rate devaluation and GDP.…”

Section: Review Of Related Literaturementioning

confidence: 99%

“…These issues are connected, and as rightly opined by Taderera et al (2021), inflation is the channel through which the effect of volatility in the exchange rate is passed onto GDP. The need to study the role of instability of the exchange rate inflation-GDP nexus from a regional perspective was anchored on four issues: (i) the study of instability of the exchange rate in the inflation-GDP nexus will aid in achieving the goal of regional macroeconomic stability (Osabuohien et al 2018;Mahonye and Zengeni 2019); (ii) instability of the exchange rate that leads to currency depreciation may aggravate inflation, such that export may be less competitive in eliminating possible deficits in the balance of payments and debt-relieving challenges, and as such, the expected benefits from depreciation may be an elusive thing (Chipili et al 2017;Revelli 2020); (iii) most of the countries within the SADC are external-sector-driven, and the need to make it competitive in developing economies has long been emphasized in economic literature (Leichter et al 2010, Ucube et al 2017OECD 2020), and finally, (iv) like many African countries, inflation and exchange rate instability are issues to contend with in the SADC region, and therefore, the need to examine their effects on economic growth has become a continuous academic exercise; (Vilakazi 2018).…”

Section: Introductionmentioning

confidence: 99%

“…Undoubtedly, much has not been said in this extant economic literature. Closer to this study is the works of Mahonye and Zengeni (2019) and Taderera et al (2021), which assessed the transmission effect of exchange rate volatility on inflation and its contractionary impact on economic growth for Zimbabwe. Unfortunately, the studies were time-series-based and did not examine the potential consequences of inflation and volatility in the exchange rate on the GDP of the country, especially the cross-border effects of these relationships.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Exchange Rate Volatility, Inflation and Economic Growth in Developing Countries: Panel Data Approach for SADC

2022

View full text Add to dashboard Cite

In the Southern African Development Community, the relationships between exchange rate instability, inflation and economic growth remain at the forefront of economic debate because of the historical antecedent and economic clustering of member countries. Nonetheless, much is not known regarding the complexity, complementarity or substitutability of exchange rate instability and inflation on economic growth for SADC countries. This article examined the influence of exchange rate instability on the inflation–growth nexus of the region for the period of 2000 to 2018. Three major techniques of analyses, Pooled Mean Group (PMG), Generalised Moments (GM) and Dynamic Fixed Effect (DFE), were employed in achieving the goal of the study, but the Pooled Mean Group estimator of the Panel Autoregressive Distributed Lag was favoured by the Hausman test as the main instrument. The GARCH (1, 1) was also employed to generate exchange rate instability. The findings of the study showed that exchange rate instability and inflation have a negative relationship with economic growth of the region. Results further show evidence that economic growth of the region is adversely influenced by the consequential effect of exchange rate instability on inflation: the higher the level of instability in exchange rate, the worse the inflationary-growth relationship of the region. This confirms the menu cost theory of price setting: the higher the rate of inflation, the quicker the exchange rate pass-through effect. It is therefore recommended that policies to ensure appreciation of local currencies should be the priority of member nations.

show abstract

Section: Review Of Related Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Exchange Rate Volatility, Inflation and Economic Growth in Developing Countries: Panel Data Approach for SADC

2022

View full text Add to dashboard Cite

show abstract

“…The mine suffered a series of over four closures and resuscitation of operations ever since the discovery of the deposit by Charles Rudd in the early 90s until its recent transition from underground to open-pit operations by Vast Resources. However, another threat to shut down operations looms in as the economic environment escalates on a more volatile trajectory with the sky-rocketing inflation rates and persisting unavailability of electricity (Kaseke, 2013;Mahonye and Zengeni, 2019). The mine was recently put on a three-day electricity schedule by Zimbabwe Electricity Transmission Distribution Company (ZETDC) as the parastatal continues on a downward trend towards economic meltdown (Business and Human Rights Resource Centre, 2020).…”

Section: Introductionmentioning

confidence: 99%

Overview on an open pit mine planning of the pickstone peerless in a volatile environment

Ngoroyemoto,

Chewu,

Runganga

et al. 2022

IMJ

View full text Add to dashboard Cite

The prevailing mining climate is highly characterized by unstable consumables pricing systems, a volatile economy and skyrocketing operational costs, and exacerbated by a steady decline and intermittence in the availability of electricity. Zimbabwean mines need to extensively capitalize on the opportunity to improve productivity by emphasizing variables they can control, predominantly operational efficiency to avoid resizing of operations or facilitating downsizing by relatively insignificant factors. In this study, cycle times, rig penetration, utilization, availability and payloads were used to evaluate the mining cycles, operator costs and the information was compared against the life of mine plans with block models. Shifts were restructured to be concordant to the schedule provided by the utility company to save fuel that was being used to power metallurgical plant. Several challenges have been identified as the principal reasons behind discrepancies between the theoretical capabilities of equipment were proven to be achievable by a trial schedule which reduced the 7 days/month to less than 2 days a month. The new schedule reflects a theoretical improvement of close to 25% and significantly lower operational costs. The current mining fleet is capable of meeting the stipulated targets and even achieving more even within tough working environments characterized by harsh load shedding schedules and volatile inflation rates; however, this requires stringent monitoring and evaluation of unit process. By adopting the recommended short term production plans will avoid resizing of operations as it automatically reduces the operational costs by US $3 million annually whilst coercing both operators and management to improve their operational efficiency.

show abstract

Exchange rate volatility transmission in emerging markets

Umoru

Effiong

Umar

et al. 2023

CBSR

View full text Add to dashboard Cite

Exchange rate volatility, or a continuous fluctuation in the currency rate has been a major concern in recent years due to its impact on economic activities. No wonder concerns have been raised regarding the connection between exchange rate fluctuations and their effects on the overall economy. The motivation for the study is based on the fact that most emerging economies experiencing inflationary tendencies are more likely to experience a high degree of exchange rate volatility persistence. Such a scenario seems catastrophic to developing economies where large currency movement are more frequent. BEKK-GARCH and DCC-GARCH models were utilized to estimate volatility transmission and persistence respectively in selected African countries. Results show there is presence of spill-over effect in exchange rates of all countries. BEKK-GARCH estimates show that negative effects of exchange rate of one country had deleterious effect on exchange rate of another. We found evidence in favour of bidirectional exchange rate volatility transmission amongst all exchange rates of countries in the study. Dynamic conditional correlation (DCC) model estimates further revealed Ghanaian cedi top list of countries exchange rate volatility persistence followed by naira with a value of 1.0974. Efficient structural transformation is needed to mitigate structural problems that generate inflation in these countries.

show abstract

Exchange rate impact on output and inflation: A historical perspective from Zimbabwe

Cited by 6 publications

References 26 publications

Exchange Rate Volatility, Inflation and Economic Growth in Developing Countries: Panel Data Approach for SADC

Exchange Rate Volatility, Inflation and Economic Growth in Developing Countries: Panel Data Approach for SADC

Overview on an open pit mine planning of the pickstone peerless in a volatile environment

Exchange rate volatility transmission in emerging markets

Contact Info

Product

Resources

About