Jornal de Economia Global

Analysis of Structural Breaks in Inflation, Exchange Rate, Interest Rate and Horticultural Exports in Kenya

Abstract

Silas Kiprono

The main objective of this study was to identify the major structural breaks associated with horticultural exports in Kenya using time series variables. To achieve this objective of the study, monthly secondary data was sourced from Central Bank of Kenya. The sample period was 2005 to 2018. The variables that were used are exchange rate, interest rate, inflation and horticultural exports. Structural breaks were tested by application of Clemente-Montannes-Reyes with both Additive and Innovative outlier unit root test to allow for multiple breaks. Results indicated that some of the variables had significant structural breaks while some recorded some insignificant structural breaks. The structural breaks were also variable specific and were associated with key changes in both policy and international economic episodes. This shows that Kenya’s horticultural exports are affected by both domestic and international events and there is need by policy makers to factor in the effects of structural breaks in designing export policies.