A RESEARCH PROPOSAL
ON THE TOPIC
Factors influencing Tanzania devaluation policy in its international trade
NYERERE, LAZARO – T/UDOM/2010/03542
Table of Contents 1. INTRODUCTION 2 1.1. Background Information 2 1.2. Statement of the Problem 3 1.3. Justification of the Study 3 1.4. Overall Objective 4 1.5. Specific Objectives 4 1.6. Research Questions 4 1.7. Significance of the Study 4 2. LITERATURE REVIEW 5 2.1 Exchange rate analysis 5 2.2 The nominal effective exchange rate 6 2.3 The real effective exchange rate 6 3. METHODOLOGY 6 3.1 Methods of Data Collection 6 3.2 Methods of Data Analysis 6 3.2.1 Factors affecting balance of payments 6 RESEARCH BUDGET 8 TENTATIVE TIMEBLE 10 …show more content…
Floating rates are seen to be better in protecting the deteriorating terms of trade of the nation. If export prices fall or import prices surge the exchange rate will adjust itself to reflect the new flow of currencies and hence the resulting devaluation will restore the equilibrium. * The nominal effective exchange rate
The nominal effective exchange rate is an index number of the weighted average of bilateral exchange rates for a number of countries, where trade shares are typically used as the weights.
According to Dunn and Mutti, 2004, the effective exchange rate can be calculated for the dollar, for example, using January 1973 as the base, by calculating how much the dollar had risen or fallen since that time relative to the currencies of a number of other countries.
* The real effective exchange rate
It measure the