Panel Auto-Regressive Distributed Lag (PARDL) Modeling
of Exchange Rate in Oil Driven Economies in Africa

DA-Wariboko; Asikiye Yvonne; Essi I. Didi; Etuk; H. E

doi:https://www.doi.org/10.56201/ijcsmt.v8.no1.2022.pg58.72

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Panel Auto-Regressive Distributed Lag (PARDL) Modeling of Exchange Rate in Oil Driven Economies in Africa

DA-Wariboko, Asikiye Yvonne, Essi I. Didi & Etuk, H. E

Abstract

This study on Panel Auto-Regressive Distributed Lag (PARDL) Modeling of Exchange Rate in Oil Driven Economies in Africa, modeled exchange rate, lending interest rate and inflation for six oil producing countries in Africa within 1980 to 2019. These countries are listed as; Algeria, Angola, Egypt, Gabon, Libya and Nigeria. This paper is aimed to build an appropriate Panel Auto-Regressive Distributed Lag (P/ARDL) model for the listed variables for the selected countries, evaluate the pattern of relationship between exchange rate and other economic variables such as lending interest rate and inflation rate in the selected countries. The model is adequate for the study. The exchange rate of the local currencies of the selected countries per USD is the dependent variable, while the explanatory variables are the lending interest rate and inflation. The data used for this research is secondary in nature and the result from the estimation indicates that both lending interest rate and inflation are statistically significant with the same p-value 0.000, meaning that exchange rate is determined by both variables across all the selected six countries that make up the panel. The model obtained will be used to formulate and recommend suitable policy/policies that will improve economic growth in the selected countries. The study therefore recommends that since exchange rate is determined by lending interest rate and inflation, monetary authorities in the region should pursue stabilizing lending interest rate and inflation as swings in these determinants will cause threat in stabilizing exchange rate hence affect economic growth.

Keywords

Panel Auto-Regressive Distributed LagExchange RateLending Interest RateInflationOil Driven Economies.

References

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Panel Auto-Regressive Distributed Lag (PARDL) Modeling of Exchange Rate in Oil Driven Economies in Africa

Abstract

Keywords

References

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