The Effect of Zimbabwe's Multi-Currency Arrangement on Bilateral Trade: Myth versus Reality.

Authors

  • Steven Buigut American University in Dubai

Abstract

To tame the hyperinflation experienced in the country, Zimbabwe adopted a relatively unique solution by implementing a multi-currency system in January 2009. Five foreign currencies were granted official status. However, this arrangement is viewed as a temporary measure to restore stability and there is no commitment by authorities to maintain it long term. The present study uses a theoretically consistent gravity model that accounts for endogeneity, to estimate the effect of the multi-currency arrangement implemented in Zimbabwe on bilateral trade. The period covered by the study is from 2004 to 2012 using a total of 50 potential trading partners from Africa, Asia, Western Europe, Eastern Europe, North and South America. The results suggest that the multi-currency arrangement as adopted has depressed Zimbabwe's bilateral trade by nearly 15 percent.  

Keywords: multi-currency regime; gravity model; trade, Zimbabwe.

JEL Classifications: F14; F15; F33

Downloads

Download data is not yet available.

Downloads

Published

2015-07-15

How to Cite

Buigut, S. (2015). The Effect of Zimbabwe’s Multi-Currency Arrangement on Bilateral Trade: Myth versus Reality. International Journal of Economics and Financial Issues, 5(3), 690–700. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/1255

Issue

Section

Articles