The Impact of External Debt on Exchange Rate Variation in Romania

Bunescu, Liliana

doi:10.14254/2071-789x.2014/7-3/8

Cited by 14 publications

(14 citation statements)

References 10 publications

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“…Economics and Sociology,11(2), 52-63. doi:10.14254/2071-789X.2018/11-2/4 transition economies (Bunescu, 2014). Therefore, it is significant to examine the determinants of exchange rate movements to prevent momentous exchange rate deviations from the fundamentals that can affect macroeconomic performance.…”

Section: Introductionmentioning

confidence: 99%

The Impact of Divisia Money on Monetary Model of Exchange Rate in Indonesia

Leong¹,

Puah²,

Liew³

2018

Economics &Amp; Sociology

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Stability of the exchange rate is critical for policy formulation in Indonesia and thus, has boosted the study of exchange rate behaviour. In this study, the monetary model of exchange rate has been utilised to determine the exchange rate for Indonesia. The model was improved by means of including the Divisia monetary aggregate as the money measure instead of conventional money supply. The ARDL approach, which was valid in spite of the variables' stationary properties, was used for the estimation. The findings indicated that monetary fundamentals are significant in explaining the exchange rate movements in Indonesia when Divisia money was incorporated into the monetary model of the exchange rate. As a result, monetary fundamentals can serve as the determinants of exchange rate in addition to non-monetary fundamentals in the case of Indonesia. High magnitude of the money supply differential and the real income differential coefficients also implied that monetary targeting can serve as a useful instrument for monetary policy in addition to inflation targeting. The research is based on the data ranging from 1984Q1 to 2017Q1.

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Section: Introductionmentioning

confidence: 99%

The Impact of Divisia Money on Monetary Model of Exchange Rate in Indonesia

Leong¹,

Puah²,

Liew³

2018

Economics &Amp; Sociology

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“…Devereux et al (2006) discovered that exchange rate depreciation in the foreign exchange market increased external debt in emerging countries. While examining the linkage between external debt and variation in exchange rate from the Romanian economy, Bunescu (2014) used Fisher-Snedecor F-test to estimate the relationship between external debt and exchange rate variation in the Romanian economy. It was discovered from the study that external debt explained the evolution of exchange rate in the study.…”

Section: Empirical Literature Reviewmentioning

confidence: 99%

Investigating External Debt and Exchange Rate Fluctuations in Nigeria: Any Difference with ARDL Model?

Aderemi

Fagbola

Sokunbi³

et al. 2020

Studia Universitatis Babes-Bolyai Oeconomica

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One of the contending issues in Nigeria in the recent time is external debt and exchange rate fluctuations. In view of the above, this study examined the relationship between external debt and exchange rate fluctuations in Nigeria over the period of 1981 to 2018. Consequently, the study employed Autoregressive Distribution Lag Model to address the objective of the study. The major findings that originated in this paper are as follows: external debt, debt service payment and foreign reserve have a significant positive impact on exchange rate fluctuations in the short run in Nigeria. Furthermore, based on these findings, recommendations are made for the policy makers that external debt as a means of financing budget deficit should be minimized if not totally discouraged in Nigeria because its servicing in particular and repayment put pressure on foreign exchange market in the short run and thereby leads to exchange rate fluctuations in terms of depreciation of naira in the country. Also, country’s foreign reserve should be strengthened through the implementation of aggressive export promotion policy in Nigeria.

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“…Research mentioned points to the result that the increase in external debt depreciates the real exchange rate. The effect external debt on exchange rate is analysed in [15] analysed using linear regression model. Pearson correlation coefficients for various components of external debt are specified, but the most prominent subject is public external debt which has considerable impact on fluctuation of exchange rate.…”

Section: Literature Reviewmentioning

confidence: 99%

The analysis of the impact of depreciation on external debt in long run: evidence from Croatia

Palić¹,

Banić²,

Matić³

2018

Interdiscip. Descr. Complex Syst.

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The impact of exchange rate changes in small open economies has been a widely researched topic for decades. According to economic theory and relevant research, depreciation can have a positive impact on the economy through an increase in exports, and a negative effect through decrease in an individual consumption. The aim of this article is to assess the impact of exchange rate depreciation on external debt in Croatia in the long-run. The long-run impact of depreciation on external debt in Croatia is assessed using Johansen cointegration approach. The results point to the existence of one cointegration relation. The long-run impact of exchange rate depreciation on external debt in Croatia is statistically significant and positive, what is in line with previous research and economic theory. The conducted analysis outlines the possible negative impact of depreciation on Croatian economy through the increase of external indebtedness, what could consequently decrease the wealth of all sectors indebted in foreign currency. Since Croatia is a highly euroised small open economy with high external indebtedness in foreign currency, this research provides captivating results for monetary and fiscal policy-making in Croatia. Therefore, as a result of the conducted empirical analysis, the exchange rate depreciation in Croatia is not recommended as the instrument of increasing export competitiveness due to current high external indebtedness in foreign currency.

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The Impact of External Debt on Exchange Rate Variation in Romania

Cited by 14 publications

References 10 publications

The Impact of Divisia Money on Monetary Model of Exchange Rate in Indonesia

The Impact of Divisia Money on Monetary Model of Exchange Rate in Indonesia

Investigating External Debt and Exchange Rate Fluctuations in Nigeria: Any Difference with ARDL Model?

The analysis of the impact of depreciation on external debt in long run: evidence from Croatia

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