Title:
MOVEMENT OF REAL EXCHANGE RATE ON CURRENT ACCOUNT CONSTRAINTS GROWTH IN LIBERIA. A VECTOR AUTOREGRESSIVE MODEL

Authors:
Lester Zomatic Tenny, Liberia

Abstract:

The objective of this paper was to examine movement of Real Exchange Rate on Current Account constraints growth in Liberia. This study analysed the movement of real exchange rate and its constraints on current account balance in Liberia. The data collected was annual time series data from the Central Bank of Liberia and the International Monetary funds (IMF) data site for Liberia. Vector autoregressive model (VAR) and Johansen cointegration test to test for long run relationship were used and it was established that there exists no cointegrating equation amongst the variables and therefore no long run relationship amongst the variables. Augmented DF test as well as Unit roots to test for stationarity was used. The major result showed that current account balance does not move alongside real exchange rate in the Liberian economy and therefore, current account balance does not affect changes in real exchange rate in Liberia.