An Empirical Analysis of The Impact of the Exchange Rate on Exports: A Case Study of Mauritania

Abstract

The export of a country is one of the main factors indicating its economic health. This study examines the impact of the exchange rate fluctuations on exports in the case of Mauritania by using annual time series data from 1981 to 2017. The Secondary data is taken from the Central Bank of Mauritania and the World Bank Data (WBD). The study uses the Augmented Dickey-Fuller (ADF) test to check the stationarity of the data, Auto Regressive Distributive lag, and Error correction Models to check the long and short-run relationship among the variables. Results of the study show that the exchange rate has a positive and significant impact on Mauritania's exports and that gross domestic product has an impact and can determine the exchange rate. The policy implication based on the findings of the study is that high variability in the exchange rate has a high impact on exports. This indicates that the exchange rate is one of many options for accelerating and determining the trade balance, considering recommendations by Enhancing Structural Reforms to Improve Economic Flexibility, Adjusting Trade Policies to Mitigate the Negative Effects of Exchange Rate Volatility, and Implement Exchange Rate Stabilization Measures.