An Empirical Test of the Relationship between Exchange Rate, Interest Rate and Inflation in Five African Countries from 1980 To 2012

Dr. Amachree, Queen Ori-Ibim

An Empirical Test of the Relationship between Exchange Rate, Interest Rate and Inflation in Five African Countries from 1980 To 2012

Dr. Amachree, Queen Ori-Ibim * §

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queenasky

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Prof. Williams Aminadokiari Samuel Abomaye-Nimenibo

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University of Port Harcourt

An Empirical Test of the Relationship between Exchange Rate, Interest Rate and Inflation in Five African Countries from 1980 To 2012

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Abstract

The study examines the empirical relationship between exchange rate, interest rate and inflation in the context of Sub -Sahara African countries using panel data over 1980-2012 periods. The estimated values of the pooled, fixed and random effects models reveal identical results that interest rate and inflation maintain a monotonous relationship with the exchange rate, though the relationship is insignificant for interest rote only in the random effect model based on 1% level of significance. However; the result of the Hausman Test shows that the random effect model is not appropriate rather, the fixed-effect model is preferred. Based, on the Johansen Fisher panel co integration approach, a long-run relationship is established among the specified variables. Finally, it was discovered that the interest rate is weakly exogenously determined in the selected-countries throughout the freely and managed floating exchange rate systems.

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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

Dr. Amachree, Queen Ori-Ibim, queenasky, Prof. Williams Aminadokiari Samuel Abomaye-Nimenibo. 2020. "An Empirical Test of the Relationship between Exchange Rate, Interest Rate and Inflation in Five African Countries from 1980 To 2012". Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 20 (GJMBR Volume 20 Issue C5).

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GJMBR Volume 20 Issue C5

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

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Classification

GJMBR-C Classification JEL Code: F31

Submission ReceivedDecember 15, 2019
Peer Review Double Blind
Handling Editor
Accepted January 5, 2020
Published January 15, 2020

Version of record

v1.2

Issue date

November 18, 2020

Language

English

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