Browsing by Author "Asefa, Atinafu"
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Item The Real Effective Exchange Rate Volatility on International Trade in Case of Ethiopia: Export-Import Values Perspective(A.A.U, 2022-01) Asefa, Atinafu; Abtie, Asres(PhD)This study aimed to empirically investigate the volatility of real effective exchange rate (REER) on international trade performance in Ethiopia by using annual time series data from 1981 up to 2019. The Vector Error Correction Model (VECM) has been employed to capture both the short run and long run relationships among the variables and the findings show that there are significant relationships between REER and export value as well as between REER and import value. The Granger causality test have been checked to examine the causal effect of one variable on other variables; basing on the test results it is evidenced that real effective exchange rate and import value hold a bi-directional causality on one another while real effective exchange rate and export value hold a uni-directional causality i.e. real effective exchange rate influences export value from one side. The data collected has been analyzed by using Eviews Software 10. The result of the findings indicated that a unit change in real effective exchange rate will lead to decrease in import and export trade of the country. Therefore, policy makers are required to focus on alternative policy measures to boost export earnings of the country rather than relying on the domestic currency depreciation.