Assessing the Impact of Exchange Rates on Economic Growth in South Africa
- Author
- Sithole, Tafadzwa
- Title
- Assessing the Impact of Exchange Rates on Economic Growth in South Africa
- Abstract
-
This research looked at how exchange rates affect South Africa's economic expansion, with
time series data on quarterly intervals from 2012 to 2022. The effect of real exchange on South
Africa's economic expansion was examined using the Johansen cointegration and vector error
correction model. Real interest rates, trade openness, money supply, real exchange rates, and
gross fixed capital formation were variables in this study. The research’s findings showed that
broad money has a negative long-term effect on economic development in SA, as well as trade
exchange rates, openness, gross fixed capital formation, and interest rates have a positive longterm effect. According to the regression results, depreciation of a nation’s money substantially
slows economic development over the long-term while substantially accelerating it over the
short-term. Undervaluation of exchange rates with the intention of achieving higher
development rates is therefore not sustainable over the long- term but only successful in the
short-run. The researcher suggested that overvaluation and depreciation of the rand be desisted
by all means in light of the study's findings. The study's findings also indicated that interest
rates have a substantial effect of economic development, and due to this impact South Africa
is advised to keep its current monetary policy in place. - Date
- 2022
- Publisher
- BUSE
- Keywords
- Exchange Rates
- Supervisor
- Miss. Pagan’a
- Item sets
- Department of Statistics and Mathematics
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