Industrial production, bank credit, and exchange rate: a cointegration application in Venezuela
DOI:
https://doi.org/10.21803/adgnosis.14.16.1021Keywords:
Bank credit, Sectoral economy, Manufacturing industry, Exchange rate, Productive transformationAbstract
Introduction: The industrial sector drives economic growth, promoting productive transformation and job creation. Objective: This study estimates the effect of bank credit and the nominal exchange rate on manufacturing output in Venezuela between January 2021 and March 2025. Methodology: An ARDL model was used to explore short- and long-term relationships. Results: The results show that these variables
are cointegrated, suggesting a stable link between them. In the long term, for every 1% increase in credit, industrial production tends to rise by 0.26%. In contrast, a depreciation of the exchange rate of the same magnitude is associated with a 0.12% decline in longerm production. In the short term, the effect of credit is even stronger, with a coefficient of 0.67, while the exchange rate has a negative influence of −0.36. Conclusions: The model includes an error correction term of −0.737, indicating that about 74% of imbalances are adjusted monthly toward equilibrium. Based on these findings, the importance of improving bank financing conditions and reducing exchange rate instability to support the recovery of the Venezuelan industrial sector is highlighted.
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