Dorah Dubihlela

This paper examines the presence of cointegration between South African gold mining index and USD/ZAR exchange rate. The results show that gold index and USD/ZAR exchange rate series are both I(1) and are cointegrated. The Granger causality test shows a two-way directional causality between gold index and USD/ZAR exchange rate for the period 9 June 2005-9 June 2015. By accounting for possible structural breaks, the Zivot-Andrews unit root test suggests two different breaking points in the data. By using the breaking dates to divide the dataset into 3 sub-periods, the results show that gold index and USD/ZAR exchange rate series are not cointegrated. The Granger causality test shows no causality between the two variables. This finding suggests that gold mining index does not play a key role in explaining the trends in the exchange rate and likewise exchange rate does not affect gold mining index.

Keywords: USD/ZAR exchange rate, gold mining index, unit root tests, breaking points, cointegration.
JEL Classification: F3, F4, F63, O47

Agriculture is the backbone of Zimbabwe’s economy with the majority of Zimbabweans being rural people who derive their livelihood from agriculture and other agro-based economic activities. Zimbabwe’s agriculture depends on the erratic rainfall which threatens food, water and energy access, as well as vital livelihood systems which could severely undermine efforts to drive sustainable economic growth. For Zimbabwe, delivering a sustainable economic growth is intrinsically linked to improved climate modelling. Climate research plays a pivotal role in building Zimbabwe’s resilience to climate change and keeping the country on track, as it charts its path towards sustainable economic growth. This paper presents a simple tool to predict summer rainfall using standardized Darwin sea level pressure (SDSLP) anomalies and southern oscillation index (SOI) that are used as part of an early drought warning system. Results show that SDSLP anomalies and SOI for the month of April of the same year, i.e., seven months before onset of summer rainfall (December to February total rainfall) are a simple indicator of amount of summer rainfall in Zimbabwe. The low root mean square error (RMSE) and root mean absolute error (RMAE) values of the proposed model, make SDSLP anomalies for April and SOI for the same month an additional input candidates for regional rainfall prediction schemes. The results of the proposed model will benefit in the prediction of oncoming summer rainfall and will influence policy making in agriculture, environment planning, food redistribution and drought prediction for sustainable economic development.

Keywords: sustainable economic growth, standardized Darwin sea level pressure anomalies, southern oscillation index, summer rainfall prediction, Zimbabwe.
JEL Classification: Q16, Q25, Q54, Q55, Q58