Abstract:
Theobjectiveofthisstudyistoinvestigatetheeffectofrealeffectiveexchangeratemisalignmentontheeconomicgrowthof12sub-SaharanAfricancountriesusingpaneldatafrom2000to2016.Relyingonpanelco-integrationtechniques,wecalculaterealeffectiveexchangeratemisalignmentsasdeviationsofactualrealeffectiveexchangeratefromtheirequilibriumvaluesforthesamplecountries.Wehavefoundapositiveandsignificanteffectofproductivityonequilibriumrealeffectiveexchangerate.Beforeapplyingthepanelsmoothtransitionregressionmodelforestimationpurposes,wetrytocheckthepresenceofnon-linearitybetweenrealeffectiveexchangeratemisalignmentandGDPpercapitagrowth.Unfortunately,thetestproofsthelinearrelationshipbetweenrealeffectiveexchangeratemisalignmentandGDPpercapita
growth.Thisresultobligedustoturnourmodeofanalysisfromanon-linearpaneldatamodeltoalinearpanelmodel.Finally,weusetheresultfeasiblegeneralisedordinaryleastsquaremodelforanalysispurposes.TheresultsofthefeasiblegeneralisedordinaryleastsquaremodelsignifythatrealeffectiveexchangeratemisalignmenthasnosignificanteffectontheeconomicgrowthofsampleSubSaharancountries.WetrytochecktherobustnessoftheresultbyapplyingHodrick-Prescottfiltermechanism,buttheresultisthesame.Andwefindasignificantandpositiveeffectofotherexplanatoryvariablesoneconomicgrowthofthesamplecountriesexcepthumancapital.
