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The impact of parallel market exchange rate volatility and oil exports on real GDP in Syria: Evidence from the ARDL approach

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  • Zouhair Mrabet
  • Mouyad Alsamara

Abstract

This paper investigates the impact of parallel market exchange rate volatility and trade on real GDP and real GDP growth in the Syrian economy over the period of 1990Q1–2010Q4. To this end, we first construct a parallel market exchange rate volatility indicator. Second, we estimate an autoregressive distributed lag (ARDL) model where we include our indicator of volatility among the main determinants of real GDP. Our findings imply that real GDP can be explained by three main variables: parallel market exchange rate, money supply, and oil exports. The long-run equilibrium reveals that parallel market exchange rate volatility has a negative impact on real GDP compared to the positive impact of money supply and oil exports. In contrast, the short-run impact of parallel market exchange rate volatility on real GDP growth is positive and very small counter to the long-run impact. Furthermore, the coefficient of the error correction term of the estimated ARDL model indicates that real GDP deviation from the equilibrium level will be corrected by about 10% after each quarter.

Suggested Citation

  • Zouhair Mrabet & Mouyad Alsamara, 2018. "The impact of parallel market exchange rate volatility and oil exports on real GDP in Syria: Evidence from the ARDL approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(3), pages 333-349, April.
    • Handle: RePEc:taf:jitecd:v:27:y:2018:i:3:p:333-349
    DOI: 10.1080/09638199.2017.1389974
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    Cited by:

    1. Safwan A. Mohammed & Ali Alkerdi & János Nagy & Endre Harsányi, 2020. "Syrian crisis repercussions on the agricultural sector: Case study of wheat, cotton and olives," Regional Science Policy & Practice, Wiley Blackwell, vol. 12(3), pages 519-537, June.
    2. SOLOMON PRINCE Nathaniel, 2020. "Does Exchange Rate Have Asymmetric Impact On Trade Balance? Fresh Insights From Combined Cointegration," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 15(1), pages 259-269, April.

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