Macroeconomic Policies and Transition to the Economic Crisis in Zimbabwe

Ndhlela, Thandinkosi

doi:10.2139/ssrn.1638827

Cited by 5 publications

(8 citation statements)

References 3 publications

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“…The introduction of a new fund known as the Troubled Bank Fund (TBF) was also carried out to help struggling banks. According to Ndlela (2011), it was established to provide liquidity and support the financial system during difficult times. Munoz (2007) notes that the TBF was regarded as a significant contributor to the growth of reserve money in 2004.…”

Section: Hyper-inflationary Era: 2000-2008mentioning

confidence: 99%

“…On 12 January 2004, the government of Zimbabwe introduced an auction process to manage the allocation of foreign currency. The consequential effect was that the exchange rate was to be adjusted according to the forces of demand and supply (Ndlela, 2011). According to Kavila and Le Roux (2017a), the lack of liquidity in the foreign exchange market was a major issue that prevented the central bank from effectively managing the currency.…”

Section: Hyper-inflationary Era: 2000-2008mentioning

confidence: 99%

“…Zimbabwe's biggest challenge over the past two decades has been to understand how best to allocate foreign currency in a way that supports the nation's economic growth agenda. The nation has been plagued by consistent foreign currency shortages coupled with constraints in developing an appropriate currency allocation regime and exacerbated by widespread exchange rate instability (Ndlela, 2011). The Reserve Bank of Zimbabwe (RBZ) launched a foreign currency auction on 23 June 2020 to improve the transparency in the country's foreign exchange transactions.…”

Section: Introductionmentioning

confidence: 99%

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Enhancing Foreign Currency Allocation for Private Sector Development – Case of the Reserve Bank of Zimbabwe Forex Auction System

Pasara,

Nyajeka,

Dunga

2023

EJEF

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Foreign currency shortages remain a perennial challenge in Zimbabwe leading to several spillover effects such as shortages in electricity, raw materials, fuel, inflation among other market distortions. The central bank introduced the Dutch Auction system in an attempt to address forex shortages but the effectiveness of this approach has been questioned. This study employed the Vector Autoregressive (VAR) and error corrected (VECM) models in order to empirically determine how the Reserve Bank of Zimbabwe can efficiently allocate foreign currency in a manner which supports private sector development. In the short run, the auction is an effective tool to promote private sector development. However, long run analysis presents a deletions effect. This is due to a rise in round-tripping from market participants to leverage and perform arbitrage on different rates (auction and parallel), increased backlog reflecting shortages in allotments and high incidences of corruption. All this leads to a significant decrease in the confidence levels of the economy among private stakeholders. The study recommends monitoring of authorized auction dealers, improve public confidence by minimizing rent-seeking behavior, re-model exporters participation in the auction system or abandoning the auction system altogether.

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Section: Hyper-inflationary Era: 2000-2008mentioning

confidence: 99%

Section: Hyper-inflationary Era: 2000-2008mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Enhancing Foreign Currency Allocation for Private Sector Development – Case of the Reserve Bank of Zimbabwe Forex Auction System

Pasara,

Nyajeka,

Dunga

2023

EJEF

View full text Add to dashboard Cite

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“…On the other hand, undervalued currency boosts local production, which leads to an increase in investment, exports and employment (Demian & di Mauro, 2018). However, undervaluation may also generate pressure on domestic prices, changing the consumption incentives with expensive imported goods and, so, misallocating resources between tradable and non‐tradable sectors, which hamper the economic activities (Ndlela, 2011). In short, both overvaluation and undervaluation influence different sectors of the economy differently (Bélanger et al, 1992; Hahn, 2007).…”

Section: Introductionmentioning

confidence: 99%

Exchange rate misalignment: A systematic literature review based on citation and content analysis

et al. 2023

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Exchange rate policy is regarded as a critical macroeconomic policy. Especially the misalignment of exchange rates is significantly impact on imported goods, particularly oil imports, which ultimately effect external and internal imbalances. This study conducts a systematic literature review on exchange rate misalignment, as well as an intriguing content analysis of the top 100 most cited articles. Further it identifies the most influential authors, papers and the journals in the field using citation analysis. The relevant articles are identified using the Scopus database. Three hundred and seventy‐two scholarly papers have been found relevant. The results of the content analysis show that the purchasing power parity is the most frequently used theoretical foundation, followed by the Behavioural Equilibrium Exchange Rate. Additionally, the analysis reveals that the authors primarily utilised time series data. The identification of essential and core journals is made through Bradford's Law. Schuh (American Journal of Agricultural Economics, 56, 1974, 1) is a pioneering study that discussed the misalignment of exchange rates in the US agriculture sector. Valérie Mignon is the most prolific author in terms of both productivity and impact. The paper authored by O'Connell (Journal of International Economics, 44, 1998, 1) titled ‘overvaluation of purchasing power parity’, is recognised as the most influential paper in terms of average citations per year.

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“…In a bid to redistribute wealth, Ndhlela (2011) posits that the new Zimbabwean government adopted a socialist based economic policy approach with the primary goal of using state intervention to redirect development for equitable benefit of black people. The government enforced price controls and financial resource mobilization instruments that included controlled interest rates and credit rationing.…”

Section: The Socio-economic Context Of Zimbabwementioning

confidence: 99%

A critique of ministers’ welfare policy in the Uniting Presbyterian Church in Southern Africa.

Zinduru

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Macroeconomic Policies and Transition to the Economic Crisis in Zimbabwe

Cited by 5 publications

References 3 publications

Enhancing Foreign Currency Allocation for Private Sector Development – Case of the Reserve Bank of Zimbabwe Forex Auction System

Enhancing Foreign Currency Allocation for Private Sector Development – Case of the Reserve Bank of Zimbabwe Forex Auction System

Exchange rate misalignment: A systematic literature review based on citation and content analysis

A critique of ministers’ welfare policy in the Uniting Presbyterian Church in Southern Africa.

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