European Academic Research ISSN 2286-4822
ISSN-L 2286-4822
Impact Factor: 3.4546 (UIF)
DRJI Value : 5.9 (B+)
Article Details :
Article Name :
An econometric analysis of the determinants of the exchange rate in Pakistan
Author Name :
Arshad Ullah Jadoon, Yangda Guang, Salman Khan, Haifa Kazouz
Publisher :
Bridge Center
Article URL :
Abstract :
The study investigated the determinants of the exchange rate in Pakistan by using annual time series data from 1970 to 2016. The main objective of the study was to examine quantitatively the relationship between the exchange rate, Inflation, real interest rate and GDP of Pakistan Data stationarity checked by ADF and PP unit root test before applying ARDL model. Cointegration results indicate that a long-run relationship exists among the dependent and independent variables. Results of long-run ARDL model indicate that GDP and real interest rate have a negative and statistically significant effect on exchange in Pakistan while the inflation rate has a significant positive effect on the exchange rate. This study has policy implications for government as well as for local and foreign investors. The government should also play an important role to make such strategies which can increase the trade in Pakistan and can boost the economic growth of Pakistan indirectly.
Keywords :
Exchange rate, GDP, Inflation, Interest rate, ARDL

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