Discovery - University of Dundee - Online Publications

Library & Learning Centre

Inflation uncertainty, exchange rate depreciation and volatility: evidence from Ghana, Mozambique and Tanzania

Inflation uncertainty, exchange rate depreciation and volatility: evidence from Ghana, Mozambique and Tanzania

Research output: Working paperDiscussion paper

View graph of relations

Authors

Research units

Info

Original languageEnglish
PublisherUniversity of Dundee
Publication date2010
StatePublished

Publication series

NameDundee Discussion Papers in Economics
PublisherUniversity of Dundee
No.246
ISSN (Print)1473-236X

Abstract

While flexible exchange rates facilitate stabilisation, exchange rate fluctuations can cause real volatility. This gives policy importance to the causal relationship between exchange rate depreciation and its volatility. An exchange rate may be expected to become more volatile when the underlying currency loses value. We conjecture that a reverse causation, which further weakens the currency, may be mitigated by price stability. Data from Ghana, Mozambique and Tanzania support this: depreciation makes exchange rate more volatile for all but volatility does not causes depreciation in Tanzania which has enjoyed a more stable inflation despite all countries adopting similar macro-policies since early 1990s.

Download statistics

No data available

Documents

Documents

Library & Learning Centre

Contact | Accessibility | Policy