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Real Exchange Rate and Trade Balance in Sierra Leone: an Empirical Investigation

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dc.contributor.advisor Narula, Subhash (PhD)
dc.contributor.author Tarawalie, Abu Bakarr
dc.date.accessioned 2018-06-21T15:38:36Z
dc.date.available 2018-06-21T15:38:36Z
dc.date.issued 2003-06
dc.identifier.uri http://etd.aau.edu.et/handle/123456789/2805
dc.description.abstract This study has analysed time-series models of trade balance and real exchange rate in the economy of Sierra Leone. More specifically, an attempt has been made to analyse the impact of exchange rate misalignment on the trade balance. The study also examines the role of real and nominal disturbance in explaining the movement of the real exchange rate in Sierra Leone. The study employs the Johansen maximum likelihood procedure in multivariate model to arrive at the long run model. Also, the Hendry’s general-to –specific method was used in order to get the short run model. Results of the study suggest that net capital inflow tends to appreciate the real exchange rate, while both the terms of trade and openness (which is a proxy for trade policy) tends to have a depreciating effect on the real exchange rate. Moreover, the error correction model shows that nominal devaluation and excess supply of domestic credit have significant effects on the real exchange rate. Nominal devaluation tends to depreciate the real exchange rate, while excess supply of domestic credit tends to appreciate it. Further more, the impact of the civil war has a depreciating effect on the real exchange rate. The study also reveals that the real exchange rate has been misaligned. In the trade balance equation, real income tends to improve the trade balance, while real money supply has a deteriorating effect on the trade balance. Also, the real exchange rate misalignment variable was found to have a deteriorating effect on the trade balance. In the error correction model, both the real exchange rate misalignment and the dummy for war variables tend to have a deteriorating effect on the trade balance en_US
dc.language.iso en en_US
dc.subject Economic Policy Analysis en_US
dc.title Real Exchange Rate and Trade Balance in Sierra Leone: an Empirical Investigation en_US
dc.type Thesis en_US


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