Exchange rate volatility–economic growth nexus in Uganda. Issue 26 (2nd June 2016)

• Record Type: Journal Article
• Authors: Katusiime, Lorna; Agbola, Frank W.; Shamsuddin, Abul
• Is Part Of: Applied economics. Volume 48:Issue 26(2016)
• Page Start: 2428
• Page End: 2442
• Publication Date: 2016-06-02
• Subjects: Exchange rate volatility -- economic growth -- Uganda; C32 -- E44 -- F31 -- F43; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2015.1122732
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: The global financial crisis has disrupted trade and capital flows in most developing economies, resulting in an increased volatility of exchange rates. We develop an autoregressive distributed lag model to investigate the effect of exchange rate volatility on economic growth in Uganda. Using data spanning the period 1960–2011, we find that exchange rate volatility positively affects economic growth in Uganda in both the short run and the long run. However, in the short run, political instability negatively moderates the exchange rate volatility–economic growth nexus. These results are robust to alternative specifications of the economic growth model.