Effect of Depreciation on Trade Balances in Selected African Countries

Effect of Depreciation on Trade Balances in Selected African Countries

Lilian Onose Okpeku

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Osman Nuri Aras

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Nile University of Nigeria

Effect of Depreciation on Trade Balances in Selected African Countries

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Abstract

Balance of trade is a key indicator of the health of any open economy. Therefore, every developing economy strives to achieve this. Currency devaluation (depreciation) is seen as an opportunity for the achievement of trade surplus. This paper aims to examine the impact of depreciation and devaluation on trade balance in Algeria, Tunisia, Gabon, South Africa, Zambia, Nigeria, Morocco, Ghana, Malawi, and Burundi. Dynamic Panel Ordinary Least square (DOLS) method and Toda-Yamamoto for impulse response analysis are employed to predict the effect of depreciation on trade balances as well as the response of trade balances to shocks from depreciation. The results show that depreciation negatively affects the trade balance in the long run and shows that there is no evidence of the J-curve in the selected countries. Moreover, the result for the impulse response function shows that trade balances respond negatively to shocks in exchange rate.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

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Not applicable for this article.

How to Cite This Article

Lilian Onose Okpeku. 2026. \u201cEffect of Depreciation on Trade Balances in Selected African Countries\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 22 (GJMBR Volume 22 Issue B1).

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GJMBR Volume 22 Issue B1

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-B Classification DDC Code: 382.1

LCC Code HF1408

Submission ReceivedAugust 30, 2021
Peer Review Double Blind
Handling Editor
Accepted September 22, 2021
Published October 2, 2021

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v1.2

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April 9, 2022

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