The paper investigates the export performance of the CEFTA 2006 countries (Albania, Bosnia and Herzegovina – BiH, Montenegro, Kosovo* (UNMIK, according to the United Nations Security Council Resolution 1244), Moldova, North Macedonia and Serbia)), using the ARDL (Autoregressive Distributed Lag) model. By applying the F-Bound ARDL test for the period from 2000 to 2022, the existence of a long-term equilibrium relationship between the real exports of the CEFTA 2006 members and the selected variables was determined, the results indicating differences in the significance of certain variables in the long run. Export performance mainly depends on the degree of trade openness (for most members), then the real effective exchange rate (BiH, Kosovo*, Serbia), while the net inflow of FDI (except Serbia) and the domestic bank loans granted to the private sector are less important (with the exception of Kosovo*).
Muntazir Hussain1, Irfan Saleem1 and Usman Bashir2
This study aims to investigate the dynamics of the interest rates and exchange rates during the pandemic-induced crisis in the Chinese economy. In the study, rolling window detrended cross-correlation analysis (DCCA) was used. The DCCA coefficient was extracted based on detrended fluctuation analysis (DFA). The data used in the study are the daily data of the period from 2/1/2019 to 7/5/2021. The results obtained in the study suggest the presence of positive cross-correlation between China’s interest rate and exchange rate after the COVID-19 pandemic, and they also report the existence of weak positive cross-correlation during the initial days of the pandemic. However, the weak positive cross-correlation became stronger over time. Higher interest rates are associated with higher exchange rates after the COVID-19 pandemic. The results of the research study have policy implications in that conventional higher interest rates introduced to defend the exchange rate might fail during pandemic-induced crises.
Haryo Kuncoro1 and Fafurida Fafurida2
Whether macroeconomic fundamentals affect the exchange rate volatility in emerging markets with an inflation-targeting regime or not is highly challenging. In this paper, the impact of the current account deficits and foreign reserves on the volatility of real exchange rates. Applying threshold quantile regression models related to Indonesia over the period from 2005(7) to 2021(12), it is concluded that both variables play an important role in controlling the exchange rate instability. Both coefficients are also found to have an upward linear pattern. The asymmetric impact of current account balance holds. Claiming that a two-percent current account deficit in the GDP is the safe amount of the deficit that will not significantly affect the foreign-exchange rate is justified as such. The asymmetric behavior of the current account balance has the potential to trigger real exchange rate volatility, thereby undermining the monetary policy within the framework of the inflation targeting regime. Accordingly, the optimal stock of foreign reserves might avoid imposing dual goals of inflation targeting and exchange rate stability.
Nataša Milenković
The main driver of growth in virtually all economies that have achieved rapid growth in recent decades, especially Asian economies, were investment and exports. There is a general agreement that export expansion represents the most eff ective way for Serbia’s economic recovery. The experience of Asian countries, those with rapid growth, can provide guidelines on how the precarious condition of the Serbian economy can be improved to a certain extent. The exchange rate is an instrument of the economic policy that simultaneously aff ects both the investment and exports of a country, and is the one easier to run than many other factors of growth and development. Several indicators indicate the importance of the exchange rate as an instrument of the economic policy in increasing exports and investments in Serbia. These are, fi rst, the extremely positive experiences of Eastern Asia economies, whose exchange rate policies are the opposite to that of Serbia, the weakness of the domestic market, indicating the necessity of an increase in exports, and thirdly, the extremely low competitiveness of the Serbian enterprises and its economy.