Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana

Exchange rate volatility has been identified as one of the drivers of export diversification. Previous studies have assumed a symmetric relationship between the two variables. However, because volatility could be positive or negative and economic agents react to these changes differently, recent stu...

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Main Author: Camara Kwasi Obeng
Format: Article
Language:English
Published: Taylor & Francis Group 2018-01-01
Series:Cogent Economics & Finance
Subjects:
Online Access:http://dx.doi.org/10.1080/23322039.2018.1460027
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spelling doaj-9f6f4b7c0dc04d3291ad54bbdce6a9802021-02-18T13:53:25ZengTaylor & Francis GroupCogent Economics & Finance2332-20392018-01-016110.1080/23322039.2018.14600271460027Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from GhanaCamara Kwasi Obeng0University of Cape CoastExchange rate volatility has been identified as one of the drivers of export diversification. Previous studies have assumed a symmetric relationship between the two variables. However, because volatility could be positive or negative and economic agents react to these changes differently, recent studies argue for the adoption of an asymmetric approach to the study of the relationship between the two variables. This study employed the partial sum process to create two variables to replace exchange rate volatility (Positive and negative variables) and utilized the Linear Autoregressive Distributed Lag (ARDL) and Nonlinear Autoregressive Distributed Lag (NARDL) techniques to investigate asymmetric effects of exchange rate volatility on export diversification in Ghana for the period 1983 to 2015. The results indicate that exchange rate volatility has asymmetric relationship with export diversification in Ghana. The study revealed that other drivers of export diversification in Ghana are income, investment, infrastructure, openness, and inflation. The paper recommends that the Central Bank should strengthen its efforts at stabilizing the exchange value of the cedi.http://dx.doi.org/10.1080/23322039.2018.1460027export diversificationsymmetricasymmetriclinear autoregressive distributed lagnonlinear autoregressive distributed lagghana
collection DOAJ
language English
format Article
sources DOAJ
author Camara Kwasi Obeng
spellingShingle Camara Kwasi Obeng
Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana
Cogent Economics & Finance
export diversification
symmetric
asymmetric
linear autoregressive distributed lag
nonlinear autoregressive distributed lag
ghana
author_facet Camara Kwasi Obeng
author_sort Camara Kwasi Obeng
title Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana
title_short Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana
title_full Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana
title_fullStr Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana
title_full_unstemmed Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana
title_sort is the effect of exchange rate volatility on export diversification symmetric or asymmetric? evidence from ghana
publisher Taylor & Francis Group
series Cogent Economics & Finance
issn 2332-2039
publishDate 2018-01-01
description Exchange rate volatility has been identified as one of the drivers of export diversification. Previous studies have assumed a symmetric relationship between the two variables. However, because volatility could be positive or negative and economic agents react to these changes differently, recent studies argue for the adoption of an asymmetric approach to the study of the relationship between the two variables. This study employed the partial sum process to create two variables to replace exchange rate volatility (Positive and negative variables) and utilized the Linear Autoregressive Distributed Lag (ARDL) and Nonlinear Autoregressive Distributed Lag (NARDL) techniques to investigate asymmetric effects of exchange rate volatility on export diversification in Ghana for the period 1983 to 2015. The results indicate that exchange rate volatility has asymmetric relationship with export diversification in Ghana. The study revealed that other drivers of export diversification in Ghana are income, investment, infrastructure, openness, and inflation. The paper recommends that the Central Bank should strengthen its efforts at stabilizing the exchange value of the cedi.
topic export diversification
symmetric
asymmetric
linear autoregressive distributed lag
nonlinear autoregressive distributed lag
ghana
url http://dx.doi.org/10.1080/23322039.2018.1460027
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