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Macroeconomic Fundamentals and the Exchange Rate Volatility: Empirical Evidence From Somalia

Author

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  • Mohamed Ibrahim Nor
  • Tajul Ariffin Masron
  • Tariq Tawfeeq Yousif Alabdullah

Abstract

The purpose of this research is to investigate the effect of macroeconomic factors on the volatility of Somalia’s unregulated exchange rates. While utilizing the EGARCH (exponential generalized autoregressive conditional heteroskedastic) model, this study found that the unregulated exchange rate volatility of Somalia is influenced by its own shocks and the macroeconomic factors. This study implies that although Somali shilling circulated without regulatory authority for the period of the statelessness, this circulation has been accompanied by volatile exchange rates. This phenomenon makes this study an appealing work that should be pursued further. Hence, this study contributes notably to the process of reforming the exchange rate system and the monetary policy of the post-conflict economy of Somalia. In addition, the results of this study imply that even in times of war and lawlessness the laws of economics do not change completely.

Suggested Citation

  • Mohamed Ibrahim Nor & Tajul Ariffin Masron & Tariq Tawfeeq Yousif Alabdullah, 2020. "Macroeconomic Fundamentals and the Exchange Rate Volatility: Empirical Evidence From Somalia," SAGE Open, , vol. 10(1), pages 21582440198, January.
    • Handle: RePEc:sae:sagope:v:10:y:2020:i:1:p:2158244019898841
    DOI: 10.1177/2158244019898841
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    References listed on IDEAS

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    Cited by:

    1. Aman, Moustapha & Nenovsky, Nikolay, 2022. "Stabilité monétaire et Currency Board régional : Vers un système à deux niveaux pour accélérer l'intégration régionale dans la Corne de l'Afrique. (Une proposition de politique monétaire) [Monetary," MPRA Paper 115298, University Library of Munich, Germany.
    2. Goktug Sahin & Afsin Sahin, 2023. "An Empirical Examination of Asymmetry on Exchange Rate Spread Using the Quantile Autoregressive Distributed Lag (QARDL) Model," JRFM, MDPI, vol. 16(1), pages 1-25, January.
    3. Moustapha Aman & Nikolay Nenovsky, 2022. "Monetary stability and regional currency board: towards a two-tier system to accelerate regional integration in the Horn of Africa: a policy proposal," Working Papers hal-04084421, HAL.
    4. Iqra Hassan Mohamud & Zakarie Abdi Warsame & Ahmed Abdirashid Mohamud & Abas Mohamed Hassan & Ibrahim Hassan Mohamud, 2024. "Renewable Energy Consumption in Somalia: Assessing Its Impact on Currency Exchange Rates," International Journal of Energy Economics and Policy, Econjournals, vol. 14(6), pages 222-229, November.

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