Unveiling the causal impact of <scp>US</scp> economic policy uncertainty on exchange market pressure of African economies

Olasehinde‐Williams, Godwin; Olanipekun, Ifedolapo Olabisi

doi:10.1002/pa.2278

Cited by 14 publications

(6 citation statements)

References 54 publications

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“…Global EPU index is made up of the EPU indices of 20 economies, based on the comparative portions of their weighted nominal gross domestic product (GDP). These indices have been used by prior studies (see, for example, Olanipekun et al, 2020). Our measure of exchange rate management is captured by the EMP, which is constructed as foreign exchange rate and international reserves minus gold.…”

Section: Methodology and Datamentioning

confidence: 99%

“…Following Olanipekun et al (2020) and Aizenman and Pasricha (2012), we constructed the EMP using the formula: 100 ( )…”

Section: Methodology and Datamentioning

confidence: 99%

“…However, for economic progress, many African countries continue to rely heavily on advantageous economic links with developed countries, especially through increased international trade and economic cooperation (Olasehinde-Williams and Olanipekun, 2020). This high level of economic openness effects exchange rate management policies as well as the international transmission of uncertainty shocks into their exchange rate markets.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Global Economic Uncertainties and Exchange Rate Management in Africa: A Panel Study

Adedokun¹,

Falayi²,

Adeyemi³

et al. 2022

Acta Universitatis Sapientiae, Economics and Business

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This study investigates the effects of global economic uncertainties on exchange rate management in Africa from 1990 to 2021. Employing the quantile regression technique, findings show that both global and domestic economic uncertainties have significant influence on exchange rate management in Africa. The intensity of global economic uncertainty rises during the bearish and transitional markets, but dependence declines during the bullish markets. Moreover, the relationship between domestic uncertainty and African exchange rate management shows that the structure of dependence improves around the upper tails but declines around the lower tails. African countries should pay attention to global economy in order to combat any impending negative effects of global economic uncertainties. Also, attention should be paid to other uncertainties such as political, social, or other factors that may aggravate domestic economic uncertainties.

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Section: Methodology and Datamentioning

confidence: 99%

“…Following Olanipekun et al (2020) and Aizenman and Pasricha (2012), we constructed the EMP using the formula: 100 ( )…”

Section: Methodology and Datamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Global Economic Uncertainties and Exchange Rate Management in Africa: A Panel Study

Adedokun¹,

Falayi²,

Adeyemi³

et al. 2022

Acta Universitatis Sapientiae, Economics and Business

View full text Add to dashboard Cite

show abstract

“…Further, Olanipekun, Olasehinde-Williams et al (2019) expand the sample to 20 countries and use four EMP measures as in Aizenman and Binici (2016) to conclude that domestic EPU and EMP are cointegrated in the long run. Most recently, Olasehinde-Williams and Olanipekun (2020) and Olanipekun and Olasehinde-Williams (2021) report more evidence about the causality from uncertainty to EMP for African economies and emerging market countries, respectively. Moreover, based on China’s data, Liu (2020) finds that macroeconomic uncertainty and financial uncertainty weaken (strengthen) EMP in a state of RMB appreciation (depreciation).…”

Section: Related Literaturementioning

confidence: 99%

“…They, however, only aim at the causal relationships between economic uncertainty and EMP. Two recent studies by Olasehinde-Williams and Olanipekun (2020) and Olanipekun and Olasehinde-Williams (2021) provide empirical evidence that U.S. uncertainty affects EMP in some emerging market countries and African economies, respectively. Nonetheless, these two studies do not consider the impact of domestic uncertainty on EMP, which may be jointly motivated by local and external factors, as derived from the theory of exchange rate determination (Mussa, 1984).…”

Section: Introductionmentioning

confidence: 99%

Economic Uncertainty and Exchange Market Pressure: Evidence From China

Lin

2022

Sage Open

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This paper evaluates the impact of local and external economic uncertainty shocks on China’s exchange market pressure from a time-varying perspective. We first construct a simple behavioral model to provide some economic background for our empirical analysis. The model identifies two channels, namely market sentiment and market demand, through which economic uncertainty has a time-varying impact on exchange market pressure. Notably, we calculate a new exchange market pressure index for China by considering China’s practice. Using the economic policy uncertainty index as a proxy for economic uncertainty and our new estimates of China’s exchange market pressure, we employ a novel TVP-VAR model controlling for over-parameterization to a monthly dataset from January 2001 to October 2020 to analyze the impact of China’s and U.S. economic policy uncertainties on China’s exchange market pressure. Our empirical findings robustly show that an upsurge in U.S. EPU is followed by appreciation pressure of the RMB against the dollar, while a hike in China’s EPU triggers devaluation pressure on the RMB. In addition, the impact of economic policy uncertainty has considerable time variation in magnitude, especially after mid-2011, showing a trade-off mechanism between the effects of domestic and foreign economic uncertainties on China’s exchange market pressure. Moreover, we attribute the time-varying features to the changes in China’s dependence on the U.S. and in the exchange rate flexibility. Finally, China should further improve the exchange rate flexibility, reduce its dependence on the U.S. and develop a more diversified currency basket in the exchange rate formation mechanism. JEL: F31 C50 E70

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Unveiling the causal interactions among theUSmonetary policy uncertainty, exchange market pressure, andFDI‐flowsin large emerging market economies

Olanipekun

Olasehinde‐Williams

2021

Journal of Public Affairs

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This study shows how exchange market pressure, FDI inflow, and FDI outflow in large emerging market economies interact with monetary policy uncertainty from the United States (US). A panel of 14 countries were examined using bootstrap Granger causality procedure that captures cross-sectional dependence, reflecting the shared developmental features among emerging economies. In the panel of countries, twoway relationships were unveiled between the US monetary policy uncertainty and exchange market pressure, between the US monetary policy uncertainty and FDI inflow, between the US monetary policy uncertainty and FDI outflow, between the exchange market pressure and FDI inflow, and between the exchange market pressure and FDI outflow. However, there are variations in country-specific results. Most

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Unveiling the causal impact of US economic policy uncertainty on exchange market pressure of African economies

Cited by 14 publications

References 54 publications

Global Economic Uncertainties and Exchange Rate Management in Africa: A Panel Study

Global Economic Uncertainties and Exchange Rate Management in Africa: A Panel Study

Economic Uncertainty and Exchange Market Pressure: Evidence From China

Unveiling the causal interactions among theUSmonetary policy uncertainty, exchange market pressure, andFDI‐flowsin large emerging market economies

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