Export Adjustment to Currency Depreciation in the Presence of Parallel Markets for Foreign Exchange: The Experience of Selected Sub-Saharan African Countries in the 1980s

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Title:	Export Adjustment to Currency Depreciation in the Presence of Parallel Markets for Foreign Exchange: The Experience of Selected Sub-Saharan African Countries in the 1980s
Author:	Yiheyis, Zelealem
Year:	1997
Periodical:	Journal of Development Studies
Volume:	34
Issue:	1
Period:	October
Pages:	111-130
Language:	English
Geographic term:	Subsaharan Africa
Subjects:	foreign exchange devaluation exports Economics and Trade
External link:	https://doi.org/10.1080/00220389708422505
Abstract:	The focus of this study is an empirical investigation of the implications of parallel exchange markets for export adjustment to official currency depreciation. An econometric model incorporating the features of exchange control and credit constraint was estimated using pooled data from 13 countries in sub-Saharan Africa. The period covered is 1980-1990, during which nonflexible exchange rate arrangements were dominant in the majority of the sample countries. A rise in the parallel currency premium was found to adversely affect offical exports; and the estimates suggest that official depreciations which are launched in the presence of large exchange-rate misalignment and which succeed in reducing the latter are likely to exert greater favourable effects on export performance than otherwise equivalent depreciations. App., bibliogr., notes, ref., sum.