Journal of Economics and International Finance
Subscribe to JEIF
Full Name*
Email Address*

Article Number - 6A2935762437


Vol.9(1), pp. 1-11 , January 2017
DOI: 10.5897/JEIF2016.0808
ISSN: 2006-9812



Full Length Research Paper

Causality between economic growth and changes of the real exchange rate in Côte d'Ivoire



Nahousse DIABATE
  • Nahousse DIABATE
  • UFR Sciences Economique et de Développement, Université Alassane Ouattara (UAO) Bouaké, Côte d’Ivoire.
  • Google Scholar







 Received: 28 September 2016  Accepted: 05 January 2017  Published: 31 January 2017

Copyright © 2017 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0


This study aims to analyze the relationship between changes in the real effective exchange rate and economic growth in Côte d'Ivoire. The autoregressive distributed lag (ARDL) approach and the Toda-Yamamoto causality test were used. The data cover the period 1980 to 2012. The results conclude the existence of a long-term relationship between economic growth and variation in the real effective exchange rate and the gross fixed capital formation. Furthermore, the results of causality test confirm the existence of bidirectional causality between the long-term misalignment and economic growth in Côte d'Ivoire. Thus, the Ivorian authorities have to observe and follow the evolution of real effective exchange rate by controlling the level and the evolution of the macroeconomic fundamentals of the economy (real GDP, productivity, terms of trade, net external position, etc...) simultaneously and this within a global framework of West Africa of Economic and Monetary Union (WAEMU).

Key words: ARDL, causality, growth, real exchange rate

Berg MA, Miao Y (2010). The Real Exchange Rate and Growth Revisited : The Washington ton Consensus Strikes Back? Working Paper, Washington DC.

 

Busson F, Villa P (1997). Croissance et Spécialisation. Revue économique 48:1457-1483.

 

Chnaina K (2013). Les Effets de la Variabilité du Taux de Change Réel sur le Commerce Extérieur : Cas de la Tunisie. 

 

Danladi DJ, Uba UP (2016). Does the Volatility of Exchange Rate Affect the Economic Performance of Countries in the West African Monetary Zone? A Case of Nigeria and Ghana. Br. J. Econ. Manage. Trade 11:1-10.
Crossref

 

Diaw K, Bamba K (2012). Régime de change et Croissance économique:le cas des pays de la CEDEAO. Conférence Economique Africaine, Kigali.

 

Diop MB, Fall A (2011). La problématique du choix de régime de change dans les pays de la CEDEAO. Document d'Etude, Dakar

 

Domaç I, Shabsigh G (1999). Real Exchange Rate Behaviour and Economic Rate Growth: Evidence from Egypt, Jordan, Morocco and Tunisia. Working Paper, Washington D.C.

 

Edwards S (1988). Real and Monetary Determinants of Real Exchange Rate Behavioral. J. Dev. Econ. 29:311-341.
Crossref

 

Engle RF, Granger CWJ (1987). Cointegration and error correction: representation, estimation, and testing. Econometrica 55:251-276
Crossref

 

Granger CWJ (1969). Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica 37:424-438.
Crossref

 

Harris RG (2001). Le taux de change peut-il influer sur la productivité? » in Schembri L. (dir.) Les taux de change flottants : une nouvelle analyse. Banque du Canada, Ottawa.

 

Ito T, Krueger AO (1999). Changes in Exchange Rates in Rapidly Development Countries:Theory, Practice, and Policy Issues. University of Chicago Press. Chicago.
Crossref

 

Klau M (1998). Exchange rate regime and inflation and output in Sub-Saharian countries. Bank of International Settlements. Working paper, Switzerland.

 

Lahrèche-Révil (1999). Taux de change réel et croissance : Perspectives pour une zone euro en Méditerranée.Révue d'Economie Financière 52:117-132.
Crossref

 

Motallebi M, Ghorbani M (2009). Application Pesaran and Shin Method for Estimating Irans' Import Demand Function. J. Appl. Sci. 9:1175-1179.
Crossref

 

Narayan PK (2005). The saving and investment nexus for China: evidence from cointegration tests, Appl. Econ. 37:1979-1990.
Crossref

 

Nelson CR, Plosser CI (1982) Trends and random walks in macroeconomic time series. J. Monet. Econ. 10:139-162.
Crossref

 

Palakiyem K (2016). Consommation d'énergie électrique et croissance économique au Togo. MPRA Paper, Munich.

 

Pesaran MH, Shin Y, Smith RJ (2001). Bounds testing approaches to the analysis of level relationships. J. Appl. Econ. 16(3):289–326
Crossref

 

Rodrik R (2008). The real exchange rate and economic growth Brookings Papers on Economic Activity 39: 365-412.

 

Toda HY, Yamamoto T (1995). Statistical inference in vector autoregression with possibly integrated processes. J. Econ. 66:225-250.
Crossref

 

Vieira FV, Hollandcde M, Gomes da Silva C, Bottecchiad LC (2013). Growth and exchange rate volatility: a panel data analysis. Appl. Econ. 45:3733-3741
Crossref

 

Viera F, MacDonald R (2010). A panel data investigation of real exchange rate misalignment and growth. Working Papers, University of Glasgow

 

Yasser A, Tsangarides CG (2006). FEER for the CFA Zone. Working Paper. Washington D.C

 


APA DIABATE, N. (2017). Causality between economic growth and changes of the real exchange rate in Côte d'Ivoire. Journal of Economics and International Finance, 9(1), 1-11.
Chicago Nahouss&e DIABATE. "Causality between economic growth and changes of the real exchange rate in Côte d'Ivoire." Journal of Economics and International Finance 9, no. 1 (2017): 1-11.
MLA Nahouss&e DIABATE. "Causality between economic growth and changes of the real exchange rate in Côte d'Ivoire." Journal of Economics and International Finance 9.1 (2017): 1-11.
   
DOI 10.5897/JEIF2016.0808
URL http://academicjournals.org/journal/JEIF/article-abstract/6A2935762437

Subscription Form