Balogun, Emmanuel Dele (2009): Determinants of West African Monetary Zone (WAMZ)countries global export trade: do foreign reserves and independent exchange rates matter?
Download (128kB) | Preview
This study examines the effect of independent exchange rate pursuits and reserve holdings, relative to other determinants, on global export performance of WAMZ countries. The regression results show that exports originating from the Zone to the rest of the world are influenced positively by domestic output, export prices and exchange rate devaluations, but negatively by import price and economic performance of the major global trading partner, proxied by the US GDP. This result is not universal as the Gambia, Ghana and Guinea total exports functions show that exchange rate policy penalized exports contrary to the Nigerian case in which the coefficient estimate is significant and positive. The study infers that these results are consistent with theoretical expectation given the ironical divergence in export basket. Although they are all primary commodity exporters, Nigeria’s exports is mainly crude oil, and a priori expectation is that rapid economic growth or booms in the US should lead to increased demand for energy (healthy competitions). In conclusion, the study infers that since independent flexible exchange rate policy pursuits and reserve holdings makes no difference to the Zonal export performance ex ante, but have great potential for global exports collectively, they could explore an OCA to enhance both intra- and global inter-regional export trade
|Item Type:||MPRA Paper|
|Original Title:||Determinants of West African Monetary Zone (WAMZ)countries global export trade: do foreign reserves and independent exchange rates matter?|
|English Title:||Determinants of West African Monetary Zone (WAMZ)countries global export trade: do foreign reserves and independent exchange rates matter?|
|Keywords:||Exchange rate policy, export trade, panel data regression model, WAMZ|
|Subjects:||F - International Economics > F1 - Trade > F10 - General
C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models
F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade
F - International Economics > F1 - Trade
|Depositing User:||Emmanuel Dele Balogun|
|Date Deposited:||22. Jan 2009 06:50|
|Last Modified:||18. May 2015 11:53|
Achy, L. and K. Sekkat (2001), “The European Single Currency and MENA’s Export to Europe”. Manuscript.
Anderson, James and Eric van Wincoop (2004). “Trade costs,” Journal of Economic Perspec-tives 52, 691-751.
Andrews, D. 1993. Test for Parameter Instability and Structural Change with Unknown Change Point. In: Econometrica 61. 821—856.
Andriamananjara, S. (1999), On the size and number of regional integration arrangements: a political economy model, World Bank Policy Research Working Paper No.2117.
Antonin Aviat and Nicolas Coeurdacier(2006,) “The Geography of Trade in Goods and Asset Holdings” ESSEC, Centre de recherché DR 06012, www. RESEARCH.CENTER@ESSEC.FR
Appleyard, D. R. and A. J. Field, JR. 1998. International Economics. © Irwin/McGraw-Hill Boston.
Aristoletelous, K. (2001), “Exchange Rate Volatility, Exchange Rate Regime and Trade Volume: Evidence from the UK-US Export Functions, 1889 – 1999”; Economics Letters, 72, 87-94.
Arize, A.C., T. Osang and D.T. Slottje (2004), “Exchange Rate Volaitility in Latin America and its Impact on Foreign Trade”. Manuniscript.
Baak, S. (2004), Exchange Rate Volatility and Trade among the Asian Pacific Countries. Manuscript.
Babetskaia-Kukharchuk, O. and M. Maurel. 2004. Russia’s accession to the WTO: the potential for trade increase. In: Journal of Comparative Economics 32(4). 680—699.
Baldwin, R., 2006, In or Out: Does it Matter? An Evidence –Based Analysis of the Euro’s Trade Effects. Centre for Economic Policy Research, London.
Baltagi, B.H., P. Egger and M. Pfaffermayr (2003) A generalized design for bilateral trade flow models, Economics Letters 80, 391-397.
Banerjee, A., M. Marcellino and C. Osbat. 2004. Some Cautions on the Use of Panel Methods for Integrated Series of Macroeconomic Data. In: Econometrics Journal 7(2). 322—340.
Baxter, M. And King, R., Measuring Business Cycles: Approximate band-pass filters for economica time series. The Review of Economics and Statistics, 81(4), pp 575-593, 1999.
Bayoumi, Tamim (1998). “Estimating trade equations from aggregate bilateral data,” International Monetary Fund Working Paper, June.
Behrens, K., A.R. Lamorgese, G.I.P. Ottaviano and T. Tabuchi (2005) Testing the ‘home market effect’ in a multi-country world. CORE Discussion Paper #2005/55.
Behrens, K., Cem Ertur & Wilfried Koch, (2007) “‘Dual’ gravity: Using spatial econometrics to control for multilateral resistance”
Berger, H. and V. Nitsch, 2006, “Zooming Out: The Trade Effect of the Euro in Historical Perspective,” mimeo, Free University Berlin.
Berka, M. (2005), “General Equilibrium Model of Arbitrage Trade and Real Exchange Rate Persistence, On line at: http://mpra.ub.uni-muenchen.de/234/, MPRA Paper No. 234.
Betts, Caroline and Timothy Kehoe (2001). “Tradability of goods and real exchange rate fluc-tuations,” Federal Reserve Bank of Minneapolis Working Paper
Bini-Smaghi, L. 1991. Exchange Rate Variability and Trade: Why Is It So Difficult to Find Any Relationship? In: Applied Economics 23. 927—936.
Blanes, J.V.,and C. Martin (2000): The Nature and Causes of Intra-Industry Trade: Back to the Comparative Advantage Explanation? The Case of Spain, Review of World Economics, 136(3), 423-441.
Bond, E.W. and Syropoulos, C. (1996) The size of trading blocs, market power and world welfare effects, Journal of International Economics, 40, 411--437.
Cerra, V. and S. Chaman Saxena (2002). “An Empirical analysis of China’s Export Behaviour”, IMF Working Paper, WP/02/200.
Chang, G. and Q. Shao (2004). “How much is the Chinese currency undervalued? A quantitative estimation”. China Economic Review, 15, 2004, 366– 371.
Chou,W. L. 2000. Exchange Rate Variability and China’s Exports. In: Journal of Comparative Economics 28. 61—79.
Coudert, V. and C. Couharde (2005). “Real Equilibrium Exchange Rate in China”. CEPII Working Paper 2005-1.
De Grauwe, P. The Economics of Monetary Union, 5th ed., New York: Oxford University Press, 2003.
De Grauwe, P.; Vanhaverbeke, W. Is Europe an Optimum Currency Area? Evidence from regional data, CEPR Discussion Paper, no. 555, May, 1991.
Deardorff, A.V. (1995). “Determinants of bilateral trade: does gravity work in a neoclassical world?”. NBER Working Paper, 5377.
Doroodian, K. 1999. Does Exchange Rate Volatility Deter International Trade in Developing Countries. In: Journal of Asian Economics 10. 465—474.
Duane, C., Philip R. Lane & Tara McIndoe (2006), “Currency Unions and Irish External Trade”, Institute for International Integration Studies (IIIS) Discussion Paper No. 189.
Egert Balazs and Amalia Morales-Zumaquero (2005), “Exchange Rate Regimes, Foreign Exchange Volatility and Export Performance in Central and Eastern Europe” in Focus on European Economic Integration. © 2005 Oesterreichische Nationalbank, Vienna.
European Commission. One Market, One Money, New York: Oxford University Press, 1992.
Ferrari and Cribari-Neto, Beta regression for modelling rates and proportions, Journal of Applied Statistics, vol. 31, nº 7, 2004.
Fidrmuc, J. and I. Korhonen. 2004. A meta-analysis of business cycle correlation between the euro area and CEECs: What do we know — and who cares? BOFIT Discussion Paper 20.
Fontaigne, L. G. and M. Freudenberg. 1999. Endogenous Symmetry of Shocks in a Monetary Union. In: Open Economies Review 10(3). 263—287.
Fountas, S. and K. Aristotelous. 1999. Has the European Monetary System Led to More Exports? Evidence from Four European Union Countries. In: Economics Letters 62. 357—363.
Frankel, J.A., Stein, E. and Wei, S-J. (1998) Continental trading blocs: are they natural or supernatural?, in Regionalization of the World Economy (Ed.) J.A. Frankel, The University of Chicago Press, Chicago, pp.91--113.
Frankel, Jeffrey and David Romer (1999). “Does trade cause growth?” American Economic Review 89, 379-399.
Fratianni, M. and Kang, H. (2006) Heterogeneous distance-elasticities in trade gravity models, Economics Letters, 90(1), 68--71.
Fratianni, Michele and Chang Hoon Oh 2007, “Size of Regional Trade Agreements and Regional Trade Bias” Indiana University and Università Politecnica delle Marche.
Heejoon Kang and Michele Fratianni (2006), “International Trade Efficiency, the Gravity Equation, and the Stochastic Frontier” firstname.lastname@example.orgemail@example.com
Helpman, Elhanan (1987). “Imperfect competition and international trade: Evidence from fourteen industrial countries,” Journal of the Japanese and international economies 1, 62-81.
Hodrick, R.; Prescott, E. Post-war U.S. Business Cycles: An Empirical Investigation, Journal of Money, 1980 Credit and Banking, 29 (1), 1980, pp. 1–16.
Inclan, C. and G. C. Tiao. 1994. Use of Cumulative Sums of Squares for Retrospective Detection of Changes of Variance. In: Journal of American Statistical Association 89. 913—923.
Jenkins, Carolyn, and Lynne Thomas. 1996. “Is Southern Africa Ready for Regional Monetary Integration?” Centre for the Study of African Economies Working Paper 51 (November), published in Lennart Petersson, ed., Post-Apartheid Southern Africa: Economic Challenges and Policies for the Future. London, New York: Routledge, 1998, pp. 145-70.
Jhingan, M. L. 2003. Macroeconomic Theory, 11th Revised Edition, © M. L. Jhingan, Vrinda Publications, New Delhi, pp. 773-787.
Jhingan, M. L. 2004. Monetary Economics, 6th Edition, © M. L. Jhingan, Vrinda Publications,New Delhi.
Kenen, P. B. The Theory of Optimum Currency Areas, In: Mundel, R., Swoboda, A. Monetary Problems of the International Economy, Chicago: Chicago University Press, 1969, pp. 4–60.
Kenen, P. Currency Areas, Policy Domains, and the Institutionalization of Fixed Exchange Rates, Centre for Economic Performance, Discussion Papers, no. 0467, London School of Economics, 2000.
Klein, M. W. 1990. “Sectoral Effects of Exchange Rate Volatility on United States Exports”. In: Journal of International Money and Finance 9. 229—308.
Krugman, P. (1991) Is bilateralism bad?, in International Trade and Trade Policy (Eds.) E. Helpman and A. Razin, MIT Press, Cambridge, MA, pp.9--23.
Krugman, P. 1993, Regionalism versus multilateralism: analytical notes, in New Dimensions in Regional Integration (Eds.) J. de Melo and A. Panagariya, Cambridge U. Press, Cambridge, pp.58--78.
Krugman, P. Lessons of Massachusetts for EMU, In: Torres, F., Giavazzi, F. Adjustment and Growth in the European Monetary Union, Cambridge: Cambridge University Press, 1993.
Krugman, P., and Elizondo, R. 1996. “Trade Policy and the Third World Metropolis”. Journal of Development Economics 49: 137-150.
Lucas, R. Econometric Policy Evaluation: A Critique, Carneggie-Rochester Conference Series on Public Policy, 1, 1976, pp. 19–46.
McKenzie, M. D. 1999. “The Impact of Exchange Rate Volatility on International Trade Flows”. Journal of Economic Surveys 13. 71—106.
McKenzie,M. D. 1998. “The Impact of Exchange Rate Volatility on Australian Trade Flows”. Journal of International Financial Markets. In: Institutions and Money 8. 21—38.
Mongelli, F. New Views on the Optimum Currency Area Theory: What is EMU Telling Us?, ECB Working Paper, no. 138, April, 2002.
Mundell, R. B. The Theory of Optimum Currency Areas, American Economic Review, 51 (4), September, 1961, pp. 657–663.
Nitsch, V. 2001. Openness and Urban Concentration in Europe, 1870-1990. HWWA Discussion Paper No. 121. Panagariya, A. (2000) “Preferential trade liberalization: the traditional theory and new developments”, Journal of Economic Literature, 38, 287--331.
Pedroni, P. 1999. Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors. In: Oxford Bulletin of Economics and Statistics 61. 653—670.
Pomfret, R. (2006) Regional trade agreements, in Regional Economic Integration (Ed.) M. Fratianni, Elsevier, Amsterdam, pp.39--54.
Rose, A. Meta-Analysis of the Effect of Common Currencies on International Trade, NBER Working Paper, no. 10373, March, 2004.
Rose, A. One Money, One Markey? The Effect of Common Currencies on International Trade, Economic Policy, 15 (30), 2000, pp. 7–45.
Siregar, R. and R. S. Rajan. 2002. Impact of Exchange Rate Volatility on Indonesia’s Trade Performance in the 1990s. Centre for International Economic Studies Discussion Paper 0205.
Taglioni, D. 2002. Exchange Rate Volatility as a Barrier to Trade: New Methodologies and Recent Evidence. In: Economie Internationale 89—90(1). 227—259.
Tenreyro, S. 2003. On the Trade Impact of Nominal Exchange Rate Volatility. Federal Reserve Bank of Boston Working Paper 32.
Wei, S. J. 1998. Currency Hedging and Goods Trade. National Bureau of Economic Research Working Paper 6742.
Zhang, J., A. van Witteloostijn, and C. Zhou (2005): Chinese Bilateral Intra-Industry Trade: A Panel Data Study for 50 Countries in the 1992-2001 Period, Review of World Economics, 141(3), 510-40.