This research paper assesses the impact of exchange rates on the economic growth of Cambodia's. The study used variables such as gross domestic product (GDP) indicating Cambodia's economic growth, as well as some explanatory variables such as exchange rate (EXR), broad money (M2), and openness to trade (TOP), rate of inflation (IFR) and foreign direct investment (FDI). The study used an ordinary least squares (OLS) regression model to estimate the effects of exchange rates on Cambodia's economic growth. The research data was downloaded from the World Bank database. According to estimates, the results show that the impact of exchange rate (EXR) and openness to trade (TOP) on GDP is 1%. Exchange rate is positively correlated with GDP, while trade openness is negatively correlated with GDP. During the period of study (1995-2017), other variables such as broad money (M2), inflation rate (IFR), and foreign direct investment (FDI) possess not significant effect on Cambodia's GDP.
A dilemma in international macroeconomics that have been being empirical debating is Meese-Rogoff exchange rate disconnect as the persistent research finding of disengaging between exchange rate and macroeconomic fundamentals. This study analyses the evidence of the exchange rate disconnect puzzle of Indonesian Rupiah vis-á-vis the United States dollar. By using ARDL, the result showed that in the short-run, Dornbusch-Frankel sticky price model explains better the refusing of the puzzle evidence which provided macroeconomic fundamental that affect exchange rate movement. Nevertheless, in the long-run, Frenkel-Bilson flexible price model provide a little support in the refusing of the puzzle evidence.
Does money supply really influence inflation in Ghana? This study investigates the dynamics of inflation, money growth, exchange rate and interest rates in Ghana from 1990-2017. The autoregressive distributed lag model (ARDL) and error correction model (ECM) were employed in the study because the studied variables were found to be integrated and co-integrated at different intensities. The results revealed that money supply has no impact on inflation in the short and long run in the study period. Exchange rate and nominal interest rate were however found to influence inflation rate significantly in both the short and long run and in the same direction. It is recommended that the Bank of Ghana should maintain a stable economic growth by establishing a rigorous pecuniary polices as well as derivatives conveyance for financial institutions in the country to act in complacence.
This study extended the existing to analysed the impact of money demand in Cambodia. In addition, to analyse the stable demand for money, the study used autoregressive distributed lag model (ARDL) approach to estimate the short and long run causality of the variables considered in the econometrics model. The results based on the bounds testing procedure confirm that a stable, long-run relationship exists between demand for money and its determinants: real income, inflation rate and nominal exchange rate. The empirical results reveal that there is a unique cointegration and stable long-run relationship among money supply, income, inflation rate and exchange rate. And found that depreciation of domestic currency decreases the demand for money. The results also reveal that after incorporating the CUSUM and CUSUMSQ tests, money demand is stable between 1996 and 2016.
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