Exchange rate impact on output and inflation: A historical perspective from Zimbabwe
Nyasha Mahonye and Tatenda Zengeni
This research looks at the inflationary effect of currency devaluation and its contractionary effect on real output growth in Zimbabwe. The study uses quarterly data from 1990 to 2006 and utilizes the Johansen co-integration regression test and vector error correction method (VECM); and examines the short run and long run relationship between exchange rate, inflation and real output. The study finds that firstly, in both the short run and long run, fluctuations in the real exchange rate are significant on real output growth and expansionary in both periods. Secondly, the findings of the study suggest that exchange rate fluctuations ...
