Research ArticleOpen AccessGoogle Scholar indexed
Exchange Rate Volatility and Economic Growth in the Democratic Republic of Congo (DRC)
Department of Economics, Faculty of Economics and Management, University of Kinshasa, Kinshasa, The Democratic Republic of Congo
Development Finance Laboratory, Cheikh Anta Diop University of Dakar, Dakar, Senegal
Department of Economics, Faculty of Economics and Management, University of Kinshasa, Kinshasa, The Democratic Republic of Congo
Department of Economics, Faculty of Economics and Management, Free University of Kinshasa, Kinshasa, The Democratic Republic of Congo
- 1 Department of Economics, Faculty of Economics and Management, University of Kinshasa, Kinshasa, The Democratic Republic of Congo
- 2 Development Finance Laboratory, Cheikh Anta Diop University of Dakar, Dakar, Senegal
- 3 Department of Economics, Faculty of Economics and Management, University of Kinshasa, Kinshasa, The Democratic Republic of Congo
- 4 Department of Economics, Faculty of Economics and Management, Free University of Kinshasa, Kinshasa, The Democratic Republic of Congo
Copy link · social · email
Abstract
This paper studied the effects of exchange rate volatility on economic growth. Our empirical analysis focuses on the Democratic Republic of Congo (DRC) from 1990 to 2021 and is based on the vector autoregression (VAR) model. The results show that economic growth is a function of its own innovations, the exchange rate and trade openness. Also, a depreciation of the domestic currency against the foreign currency hinders economic growth. These results suggest a strengthening of resilience through the diversification of economic activity in order to improve the international competitiveness of the Congolese economy.
KeywordsExchange Rate VolatilityVAREconomic GrowthDRC
- Aizenman, J., & Lee, J. (2010). Real Exchange Rate, Mercantilism and the Learning by Doing Externality. Pacific Economic Review, 15, 324-335. https://doi.org/10.1111/j.1468-0106.2010.00505.x
- Alagidede, P., & Ibrahim, M. (2017). On the Causes and Effects of Exchange Rate Volatility on Economic Growth: Evidence from Ghana. Journal of African Business, 18, 169-193. https://doi.org/10.1080/15228916.2017.1247330
- Anyanwu, F., Amalachukwu, A., & Ngozi, O. (2017). Exchange Rate Policy and Nigeria’s Economic Growth: A Granger Causality Impact Assessment. International Journal of Applied Economics Finance and Accounting, 1, 1-13. https://doi.org/10.33094/8.2017.11.1.13
- Benigno, G., Converse, N., & Fornaro, L. (2015). Large Capital Inflows, Sectoral Allocation, and Economic Performance. Journal of International Money and Finance, 55, 60-87. https://doi.org/10.1016/j.jimonfin.2015.02.015
- Central Bank of Congo (2010-2020). Annual Reports of the Central Bank of Congo.
- Dal Bianco, S., & Loan, N. (2017). FDI Inflows, Price and Exchange Rate Volatility: New Empirical Evidence from Latin America. International Journal of Financial Studies, 5, Article No. 6. https://doi.org/10.3390/ijfs5010006
- Eichengreen, B. (2008). The Real Exchange Rate and Economic Growth (World Bank PREM Network, Commission on Growth and Development Working Paper No. 4). World Bank.
- Ghosh, A. (2014). How Do Openness and Exchange-Rate Regimes Affect Inflation? International Review of Economics & Finance, 34, 190-202. https://doi.org/10.1016/j.iref.2014.08.008
- Glüzmann, P. A., Levy-Yeyati, E., & Sturzenegger, F. (2012). Exchange Rate Undervaluation and Economic Growth: Díaz Alejandro (1965) Revisited. Economics Letters, 33, 666-672. https://doi.org/10.1016/j.econlet.2012.07.022
- Habib, M., Mileva, E., & Stracca, L. (2017). The Real Exchange Rate and Economic Growth: Revisiting the Case Using External Instruments. Journal of International Money and Finance, 73, 386-398. https://doi.org/10.1016/j.jimonfin.2017.02.014
- Haoudi, A., & Rabhi, A. (2020). Taux de change et croissance économique au Maroc: Evidence empirique. Finance & Finance Internationale, 1, 1-27.
- Hatmanu, M., Căutisanu, C., & Ifrim, M. (2020). The Impact of Interest Rate, Exchange Rate and European Business Climate on Economic Growth in Romania: An ARDL Approach with Structural Breaks. Sustainability, 12, 2798. https://doi.org/10.3390/su12072798 https://databank.worldbank.org/source/world-development-indicators