- Title
- The relationship between real exchange rate misalignment and economic growth in Namibia
- Creator
- Shaduka, Mathilde Hishikomesho
- Subject
- Namibia
- Subject
- Eastern Cape (South Africa)
- Subject
- South Africa
- Date Issued
- 2021-04
- Date
- 2021-04
- Type
- Master's theses
- Type
- text
- Identifier
- http://hdl.handle.net/10948/53024
- Identifier
- vital:44892
- Description
- It has been recognised in academic and policy debates that a poorly managed exchange rate can have a devastating effect on a country’s economic growth rate. The current literature on the effect of real exchange rate misalignment on economic growth shows mixed and inconclusive results. The floating rate regime by South Africa to which Namibia’s exchange rate is fixed, contributes to exchange fluctuations that Namibia experiences. As exchange rate is one of the fundamental factors that affect economic growth, this study aims to evaluate the effect of real exchange rate misalignment on the Namibian economic growth over the period from 1990 to 2018. The study employs Equilibrium Real Exchange Rate (ERER) Model and Auto-Regressive Distributed Lag (ARDL) models as quantitative research methods approach for estimating the equilibrium exchange rate and establishing the relationship between real exchange rate misalignment and Namibia’s economic growth. The ERER model reveals that the Namibian currency was overvalued over the period under review. Furthermore, the ARDL results confirm that a significant relationship exists between real exchange rate misalignment and Namibia’s economic growth. The study further shows that real exchange rate misalignment (overvaluation) negatively affects Namibia’s growth domestic product (GDP). Consequently, consistent with current literature, the study supports the view that keeping the real exchange rate at levels close to its equilibrium level or slightly below its equilibrium level can promote economic growth in developing economies such as Namibia. The study, therefore, strongly recommends that the Namibian government should consider a currency undervaluation policy in order to promote economic activities and enhance Namibia’s GDP. it is thus crucial for policymakers to effectively manage real exchange rate regularly and ensure that it does not widely deviate from its equilibrium value. The study also recommends that Namibia should diversify its products and ease the trade barriers so as to promote exports that would boost economic activities.
- Description
- Thesis (MPhil) -- Faculty of Business and Economic Sciences, School of Economics Development and Tourism, 2021
- Format
- computer
- Format
- online resource
- Format
- application/pdf
- Format
- 1 online resource (xii, 98 pages)
- Format
- Publisher
- Nelson Mandela University
- Publisher
- Faculty of Business and Economic Sciences
- Language
- English
- Rights
- Nelson Mandela University
- Rights
- All Rights Reserved
- Rights
- Open Access
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