Browsing by Author "Nzuma, Jonathan Makau"

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    The effects of exchange rate liberalization in Kenya on French beans exports
    (Pak Publishing Group, 2014) Mwangi, Samuel C.; Mbatia, Oliver; Nzuma, Jonathan Makau
    The adoption of a floating exchange rate system in Kenya was an effort to make it more aligned to the market determined equilibrium rate. However, there is limited empirical evidence that success has since been achieved in realizing the objective for which the foreign exchange market was liberalized. The exports of French beans are one of the leading contributors to foreign exchange earnings in Kenya. Nevertheless, the economic impacts of exchange rate liberalization on French beans exports in Kenya are unclear. This paper evaluates the magnitude and direction of the effects of exchange rate liberalization on French beans exports from Kenya to its major trading partners in the European Union. Monthly data for a fixed exchange regime represented by the period from 1990-1993 and a flexible regime represented by the period from 1994-2011 was used in the estimation of an export demand model. The empirical results show that the liberalization of the exchange rate led to an increase in the French beans export volumes from Kenya to the European Union. The paper recommends that, even if the Kenyan exchange rate system is flexible, exchange rate stability is necessary to avoid adverse effects of exchange rate volatility on French beans exports. Therefore, stability of the exchange rate is needed, not at a fixed level but by controlling exchange rate volatility using the exchange rate target band.
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    Effects of Exchange Rate Volatility on French Beans Exports in Kenya
    (Springer, 2014-01) Mwangi, Samuel C.; Mbatia, Oliver; Nzuma, Jonathan Makau
    In Kenya, exports of French beans are one of the leading foreign exchange earners. Nevertheless, the economic impacts of exchange rate volatility on French beans exports in Kenya are unclear. This paper evaluates the magnitude and direction of the effects of exchange rate volatility on French beans exports from Kenya to its major trading partners in the European Union using monthly data from January 1990 to December 2011. The generalized autoregressive conditional heteroscedasticity model was employed to measure exchange rate volatility. The analytical framework used encompasses estimation of an export demand model, cointegration and specification of an error correction model. The results reveal a negative and significant short and long run effect of exchange rate volatility on French beans exports. Specifically, the empirical results show that a unit increase in exchange rate volatility in Kenya leads to more than proportionate decrease in French beans exports to the European Union. The paper recommends firms to hedge their currency exposures in the short run and implementation of economic policies aimed at stabilizing the exchange rate in the long run to improve Kenya’s export performance.
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    Effects of Market Reforms on Irish Potato Price Volatility in Nyandarua District, Kenya
    (2013) Mwangi, Samuel C.; Mbatia, Oliver; Nzuma, Jonathan Makau
    This paper evaluates the effects of market reform policies on the volatility of Irish potato prices in Kenya through an analysis of a 20 year monthly time series data set from Nyandarua district using an autoregressive econometric approach. The empirical results show that there has been a rise in Irish potato prices and lowering of price volatility after the implementation of market reform policies. The real prices exhibit seasonal variations around an upward trend with the prices being depressed during the harvesting period. The price risk premia is found to be negative revealing that the cost of carrying out Irish potato business declined, and farmers were better off with the implementation of the reforms. The collection and distribution of price information, storage of Irish potatoes during periods of glut, improvement in productivity and use of commodity exchange markets can help to reduce price volatility.