Linkages between exchange rate and economic growth in Pakistan (an econometric approach)

Aman, Qaiser; Ullah, Irfan; Khan, Muhammad Imran; Din, Saif Ud

doi:10.1007/s10657-013-9395-y

Cited by 23 publications

(21 citation statements)

References 12 publications

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“…in their analysis and Nawaz (2012) reported devaluation to be contractionary in the long-run, while expansionary in the short run. Our results however are not in conformity with findings of Mahmood et al (2011) and Aman et al (2017) who did not apply co-integration techniques in their analyses. Mahmood et al (2011) in their study are not the relevant methodologies when the variables are non-stationary at levels.…”

Section: Hypothesiscontrasting

confidence: 99%

“…The study finds a level relationship between the dependent and the set of explanatory variables. The common limitation of this study like other studies conducted by Khan et al (2012), Nawaz (2012), Ahmad et al (2013), and Aman et al (2017) in case of Pakistan is that all assumed symmetric relationship between E.R. and macroeconomic aggregates.…”

Section: Review Of Literaturementioning

confidence: 77%

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An analysis of the asymmetric impact of exchange rate changes on G.D.P. in Pakistan: application of non-linear A.R.D.L.

Hussain

Khan

et al. 2019

Economic Research-Ekonomska Istraživanja

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Exchange rate fluctuations play a vital role in influencing macroeconomic variables including economic growth via the channels of net exports and investments. This study claims to be the first in assessing the asymmetric effect of exchange rate fluctuations on G.D.P. in Pakistan whose currency had the title of 'worst currency of South Asia' in 2018 after more than 20% depreciation in just three months. In this study, we employ a recently developed technique of Non-linear A.R.D.L. by Shin, Yu, and Greenwood-Nimmo (2014) to test for possible asymmetric effect of exchange rate on G.D.P. along with the proxies of fiscal and monetary policies. Both A.R.D.L. and N.A.R.D.L. are applied on annual data range from 1972 to 2014. The results of A.R.D.L. are found poor and co-integration relationship lost when the assumption of symmetry is taken into consideration. On the contrary, Non-linear A.R.D.L. technique carry more rich information related to the issue at hand and co-integration relationship is confirmed. From the results we found that week currency hurts G.D.P. growth, while strong currency adds to growth. Besides these, we confirm asymmetric impact of exchange rate on G.D.P. growth in Pakistan and find the evidence of short-run, long-run and adjustment asymmetry. To achieve the objective of sustained growth, exchange rate management should focus to restore stability and go for more strong currency in Pakistan. Future research needs to consider capital flows and exchange rate regimes in the form of 'Sudden Stop hypothesis' when investigating the asymmetric impact of exchange rate.

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Section: Hypothesiscontrasting

confidence: 99%

Section: Review Of Literaturementioning

confidence: 77%

An analysis of the asymmetric impact of exchange rate changes on G.D.P. in Pakistan: application of non-linear A.R.D.L.

Hussain

Khan

et al. 2019

Economic Research-Ekonomska Istraživanja

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“…He found that the real exchange rate increase had a positive effect on the economies of provinces. Aman et al (2013) investigated the relationship between exchange rate and economic growth in Pakistan for the period 1976-2010 by employing threestage least square techniques. They showed that the exchange rate has a positive impact on economic growth through promoting export and import substitute industry.…”

Section: Literature Reviewmentioning

confidence: 99%

Influence of Exchange Rate on the Economic Growth in the Turkish Economy

Karahan¹

2020

FAI

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The traditional view asserts that there is a positive relationship between the foreign exchange rate and economic growth. So much so that an increase in foreign exchange rates enhances the net export volume and thus positively affects economic growth due to the increasing total demand. However, structural economists argue that there is an inverse relationship between the exchange rate and economic growth. Especially in developing countries, the input structure of production depends on imported capital and intermediate goods, so an increase in exchange rates makes import production inputs more expensive and thus negatively affects economic growth. Turkey, leaving foreign exchange rate free float since 2002, has implemented the Inflation Targeting (IT) regime as the monetary policy. Therefore, Turkey has a real experience to analyse the role of exchange rate changes on economic growth. Accordingly, in our study, using the quarterly data between 2002-Q1 and 2019-Q1, the relationship between exchange rate and economic growth was examined by employing Johansen cointegration test, Granger causality test and Innovation Accounting Techniques. Empirical findings suggest that there is a negative causal relationship between exchange rates and economic growth, as claimed by structuralist economists. In terms of policy implications, it can be argued that, even under the inflation targeting regime in Turkey, both price and exchange rate stability should be provided together.

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“…The inspected results of the exchange rate contradict with previous researchers' results. Aman et al, (2017) stated that exchange rate appreciation helps to improve the economy and causes economic growth in Pakistan. Rodrik (2008) investigated the relationship of the exchange rate to economic growth, and the examined results pointed out that the deprecation of the exchange rate compared to other currency in developing countries strongly affects the economic growth.…”

Section: Resultsmentioning

confidence: 99%

The effect of worker remittances on economic growth: An ARDL approach

Teng

Khan

2019

Self Cite

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Worker remittances are the main source of financial flow to any economy. This study intended to scrutinize the effect of remittance inflow on Pakistan’s economy over the period 1976- 2016 by employing autoregressive distributed lag (ARDL) technique; because this method has been recently developed and has different advantages as compared to time series methods. ARDL method was applied to scrutinize the long run and the short run effect of worker remittances on Pakistan’s economy. This study concluded that Pakistan’s economy is positively affected by remittance inflow, foreign direct investment and the gross domestic saving in the long run, while Pakistan’s economy negatively affected by inflation and consumption in the long run. Remittances received from immigrant support economic growth in Pakistan because remittances inflow is mostly utilized for investment purpose. To further improve the economic development of Pakistan’s economy, it is suggested that policy maker in Pakistan encourage and motivate migrants to send remittances through proper channels to Pakistan, so that these inflows of remittances be used in such profitable investments that help to improve economic growth.

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Linkages between exchange rate and economic growth in Pakistan (an econometric approach)

Cited by 23 publications

References 12 publications

An analysis of the asymmetric impact of exchange rate changes on G.D.P. in Pakistan: application of non-linear A.R.D.L.

An analysis of the asymmetric impact of exchange rate changes on G.D.P. in Pakistan: application of non-linear A.R.D.L.

Influence of Exchange Rate on the Economic Growth in the Turkish Economy

The effect of worker remittances on economic growth: An ARDL approach

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