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Copper Price and Exchange Rate Dynamics in Zambia
Author(s) -
Chipili Jonathan M.
Publication year - 2016
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.3183
Subject(s) - cointegration , economics , exchange rate , boom , copper , order (exchange) , monetary economics , econometrics , macroeconomics , chemistry , environmental science , organic chemistry , environmental engineering , finance
The kwacha/US$ exchange rate has fluctuated widely with large changes attributed to the copper price booms and bursts due to the significant contribution of copper to the Zambian economy. Accordingly, the estimation results conducted in the cointegration framework over the period 1994q1–2012q4 reveal the existence of a long‐run equilibrium relationship between the real copper price and real kwacha/US$ exchange rate. These empirical results signify the importance of closely monitoring underlying developments in the copper price in order to design appropriate policy response to ensure that impulses to the copper price do not undermine the external competitiveness of the economy. Copyright © 2015 John Wiley & Sons, Ltd.