- Title
- Implications of a currency board arrangement for the Zimbabwean economy: the lessons of experience
- Creator
- Ndlovu, Edwin
- Subject
- Economic indicators
- Subject
- Inflation targeting
- Subject
- Foreign exchange
- Date
- 2010
- Type
- Master's theses
- Type
- text
- Identifier
- http://hdl.handle.net/10353/26492
- Identifier
- vital:65480
- Description
- Inflation is one of the most important factors for gauging the health of the economy. For production, employment and trade to take place, it is crucial that inflation be low and stable. This study analyses the implications of a currency board system in a hyperinflationary economy, using quarterly Zimbabwean data covering the period 1995 to 2008.An empirical model linking inflation to its identified theoretical determinants is specified. The study employs a cointegration and a vector error correction (VEC) modeling, to provide robust long run and short run dynamic effects of hyper inflation on the economy. The empirical findings reveal a strong significant relationship between inflation and government deficit, expected inflation, money supply growth and the exchange rate. These results corroborate the theoretical predictions and the previous findings that most hyperinflations are deficit-induced. The study thus suggests an implementation of a currency board arrangement for Zimbabwe to eradicate hyperinflation based on its link with exchange rate, money supply and government deficit. A currency board restrains the tendency by most central banks to create money to finance government deficits, and reduces expectations of rising inflation through its instantaneous credibility in reducing inflation.
- Description
- Thesis (MCom) -- Faculty of Management and Commerce, 2010
- Format
- computer
- Format
- online resource
- Format
- application/pdf
- Format
- 1 online resource (126 leaves)
- Format
- Publisher
- University of Fort Hare
- Publisher
- Faculty of Management and Commerce
- Language
- English
- Rights
- University of Fort Hare
- Rights
- All Rights Reserved
- Rights
- Open Access
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UFH Department of Economics
| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details | SOURCE1 | Edwin Thesis.pdf | 1 MB | Adobe Acrobat PDF | View Details |