
International Journal For Multidisciplinary Research
E-ISSN: 2582-2160
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A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal
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Volume 7 Issue 4
July-August 2025
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Determinants of Export and Import Dynamics: The Role of Exchange Rates in Kenya’s Economy
Author(s) | Dr. Shyam Charan Barma |
---|---|
Country | India |
Abstract | This study investigates the long-run and short-run dynamics among Kenya’s exchange rate, exports, and imports using monthly data from January 1992 to October 2017 through a Vector Error Correction Model (VECM). ADF test analysis confirms that the variables are non-stationary at levels but become stationary after first differencing, indicating integration of order one. The VECM reveals cointegration, with imports strongly driving shilling depreciation and exports exerting a smaller appreciating effect. The shilling shows moderate error correction, while imports and exports exhibit strong adjustments, reflecting high trade sensitivity. A significant relationship exists between the exchange rate, exports, and imports, with exports negatively influencing imports, suggesting potential trade balance improvements. However, limited export responsiveness to depreciation and import crowding effects highlight structural challenges. Policymakers should prioritize stabilizing the shilling, diversifying exports, and reducing reliance on inelastic imports (e.g., oil, machinery) to enhance Kenya’s trade balance and economic resilience, addressing structural constraints to improve competitiveness |
Keywords | Stationarity, ADF Test, Vector Error Correction Model, VEC Stability Condition Check |
Field | Sociology > Economics |
Published In | Volume 7, Issue 4, July-August 2025 |
Published On | 2025-07-29 |
DOI | https://doi.org/10.36948/ijfmr.2025.v07i04.52086 |
Short DOI | https://doi.org/g9vpzm |
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E-ISSN 2582-2160

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IJFMR DOI prefix is
10.36948/ijfmr
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