Effects Of Exchange Rate Volatility On Real Estate Prices In Developing Economies, A Case Of Ghana
DOI:
https://doi.org/10.14738/assrj.611.7392Abstract
This study aims to find out whether exchange rate volatility affects real estate domestic house prices in Ghana. To this end, a 32 years secondary data from World Development Indicators (WDI) and data from Real Estate Developers in Ghana are employed for the study. The study employs Autoregressive distributed lags (ARDL) bounds testing of cointegration t o test the null hypothesis that exchange rate volatility has n o impact on real estate housing prices. The study finds that real estate price is cointegrated with remittances, exchange rate and inflation. The long run equilibrium is stable and significant. Exchange rates d o not cause changes in real estate prices in both short and long run. Similarly past prices of real estate d o not have impact on current house prices. Rather, remittances positively cause real estate prices. Inflation on its part has a negative impact on real estate prices. It is therefore concluded that, volatility in the exchange rate between the cedi and other trading currencies does not predict changes in real estate prices.
References
Adewuyi, A. O., and Akpokodje, G., (2013). Exchange Rate Volatility and Economic Activities of Africa’s Sub-Groups, The International Trade Journal
Alagidede, P. and Ibrahim, M. (2016) “The Causes and Effects of Exchange Rate Volatility on Economic Growth. Evidence from Ghana
Anim-Odame, W. K., Key,T. and Stevenson, S. (2010a): Residential Market Development in Sub-Saharan Africa. International Journal for Housing Market and Analysis 3, (4)
Anim-Odame, W. K., Key,T. and Stevenson, S. (2010b): The Ghanaian Transaction-based Residential Indices. International Journal for Housing Market and Analysis 3, (3)
Anim-Odame, W., Key, T. and Stevenson, S. (2009). Measures of Real Estate Values from Land Registration and Valuation Systems in Emerging Economies: the case of Ghana. Journal of Real Estate Literature
Attela, V, Atzeni E.G and Belvisi, P (2003), Investment and exchange rate under uncertainty, center for international studies on economic growth research paper series, vol 11,No.32 Avebury.
Bahmani-Oskooee, M. & Kandil, M. (2007): Exchange Rate Fluctuations and Output in Oil Producing Countries: The Case of Iran. International Monetary Fund, IMF Working Paper, WP/07/113, 132
Bahmani-Oskooee, M. & Nasir, A. B. M. (2004), ARDL approach to test the productivity bias hypothesis. Review of Development Economics, 8(3)
Bahmani-Oskooee, M., & Gelan, A. (2018), “Exchange-rate volatility and international trade performance: Evidence from 12 African countries”, Economic Analysis and Policy
Balaban, S. (2011) Migrant Remittances and Resulting Transformations of the Housing Market in Romania, Master’s Thesis
Buckley, R. M. and Mathema, A. S. (2007) Is Accra a Superstar City? The World Bank
CHF International (2004) Strategic Assessment of the affordable housing sector in Ghana
Clark, P., Tamirisa, N., and Wei, S-J., (2004). A New Look at Exchange Rate Volatility and Trade Flows, IMF Occasional Paper
Danjuma, B. F., Shuaibu, U., and Sa’id, U. Y., (2013). An Assessment of Exchange Rate Volatility and Inflation in Nigeria. Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB)
Dell'Ariccia, G., (1999). “Exchange Rate Fluctuations and Trade Flows: Evidence from The European Union”, IMF Stuff Paper
Diala A. O., Kalu I. U. & Igwe-Kalu A. (2016), Effects of exchange rate volatility on commercial property returns in Nigeria. African Journal of Accounting, Economics, Finance and Banking Research, Vol. 10 No. 10
Dickey, D. A., and Fuller, W. A. (1979) Distribution of Estimators for Autocorrelated, Time Series with a Unit Root Journal of the American Statistical Association
Dickey, D. A., and W. A. Fuller (1981) Likelihood Ratio Test for Autoregressive Time Series with a Unit Root. Econometrica 49, 1057–72.
Eichengreen, B., (2008) The Real Exchange Rate and Economic Growth, Commission on Growth and Development Working Paper No. 4.
Fayissa, B. and Nsiah, C. (2008) The Impact of Remittances on Economic Growth and Development in Africa. Department of Economics and Finance Working Paper Series
Fiadzo, E. (2004) Estimating the Determinants of Housing Quality: the Case of Ghana. Joint Centre for housing studies, working paper series
Fuller, W.A. (1996). Introduction to Statistical Time Series, New York: John Wiley and Sons Publishing Ltd.
Fuentes, O. M., (2006). Exchange Rate Volatility and Investment: Evidence at the Plant-Level. Boston University, mimeo
Ghana Statistical Service (2005) Population Data Analysis Report,
Ghatak S. and Siddiki, J.(2001), The use of ARDL approach in estimating virtual exchange rates in india, journal of applied statistics
Grydaki, M. and Fountas, S., (2009) Exchange Rate Volatility and Output Volatility: A Theoretical Approach. Review of International Economics, 17 (3)
Hammond, F. (2006) Real estate resource control: policy incentives and investment for development. RICS Research Paper Series Vol. 6 No. 11
Johansen, S. and Juselius, K., (1990) Maximum Likelihood Estimation and Inference on Cointegration with Application to the Demand for Money, Oxford Bulletin of Economics and Statistics
Johansen, S. and Juselius, K., (1999) “Maximum Likelihood Estimation and Interference on Cointegration with Applications to the Demand for Money”, Oxford Bulletin of Statistics,
Jorion, P (1990), The exchange rate exposure of US multinationals, Journal of Business
Joseph, A. I. and Akhanolu, I (2011), An empirical investigation of the link between exchange rate volatility and trade in Nigeria, Journal of Emerging Trends in Economics and Management Sciences
Kiyota K. and Urata, S. (2004) Exchange Rate Volatility and Foreign Direct Investment, World Economy Land Title Registration Law, (PNDCL 152) 1986
Lee, S. L and Thomas, M (2006), Impact of exchange rates on international Real Estate portfolio, Journal of Real Estate Portfolio management
Liu, C. H and Mei, J (1998); The predictability of international Real Estate markets, exchange rate risk and diversification consequences, Real Estate Economic,
Lim, G. and Tsiaplias, S., (2016) “Non-Linearity in the Relationship between House Prices and Interest Rates: Implications for Monetary Policy,”
Loyford, M. M. & Moronge, M. (2014).Effects of economic factors on performance of real estate in Kenya, European Journal of Business Management
McKenzie, Michael D., (1999), “The Impact of Exchange Rate Volatility on International Trade Flows,” Journal of Economic Surveys, Vol. 13, No. 1,
Mordi, C.N.O (2006), Challenges of exchange rate volatility in economic management in Nigeria. CBN bulletin 30(3)
Murinde, V. (1993) Macroeconomic Policy Modelling for Developing Countries, Aldershot:
Obstfeld, M. and Rogoff, K.(1995); “Exchange rate dynamics redux” Journal of Political Economy,
Obstfeld, M. and Rogoff, K.(2000); “New Directions for Stochastic Open Economy Models,”Journal of International Economics
Olowe, R. (2009), Modeling naira / dollar exchange rate volatility: application of GARCH and asymmetric models, International Review of Business Research papers 5(3).
Omjimite, B.U. and Akpokodje, G. (2010). The Effect of Exchange Rates Volatility on the Imports of ECOWAS Countries. Journal of Social Sciences, 4 (2)
Omolara, A.C (2010), Foreign exchange market and monetary management in Nigeria, Journal of Emerging Trends in Economics and Management sciences Osei-Assibey, K.P., 2010, Exchange rate volatility in LDCs: Some findings from the Ghanaian, Mozambican and Tanzanian markets. PhD Thesis, Submitted to Economics Studies Department, Collage of Arts and Social Science, University of Dundee, Country
Pesaran, M. H. & Pesaran, B. (1997);Working with Microfit 4.0: An interactive approach. Oxford, Oxford University Press.
Pesaran, M. H. & Shin, Y. (1999); Long-run structural modeling, Econometric Reviews
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001); Bounds testing approaches to the analysis of level relationships. Journal of Applied Economics
Phillips, P.C., & Perron, P. (1988); Testing for a unit root in time series regression, Biometrika, Policy Research Working Paper
Saunders, M., Lewis, P. and Thornhill, A. (2007) Research Methods for Business Students Published by Pearson Education Limited
Senadza, B. and Diaba, D.D. (2017) Effect of Exchange Rate Volatility on Trade in Sub-Saharan Africa. Journal of African Trade
Tang, T. C. (2006). Are imports and exports of OIC member countries cointegrated? A re-examination; Journal of Economics and Management14(1),
Wang, Yajie and Wang, C. (2013), “Analysis of the Fundamentals to Influence the Price of China’s Real Estate”,
Webb, B and O'Keefe, J (2002), The case for global Real Estate. Working paper published by Global Asset Management World Bank’s World Development Indicators, accessed February, 2018.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2019 Advances in Social Sciences Research Journal
This work is licensed under a Creative Commons Attribution 4.0 International License.
