Macroeconomic fundamentals and exchange rates in South Asian economies: evidence from pooled and panel estimations

Muhammad Umar Draz, Fayyaz Ahmad, Bhumika Gupta () and Waqas Amin
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Muhammad Umar Draz: Department of Management and Humanities (Universiti Teknologi PETRONAS)
Fayyaz Ahmad: School of Economics (Lanzhou University)
Bhumika Gupta: LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], IMT-BS - MMS - Département Management, Marketing et Stratégie - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris]
Waqas Amin: UO - University of Okara

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Abstract: Purpose - This study aims to examine the impact of macroeconomic fundamentals on exchange rates of selected South Asian economies during 1981-2013.Design/methodology/approach - The authors have used two econometric approaches to the data. For the pooled sample, estimated generalized least square (EGLS) and the two-stage least square method are applied. For the panel data, the authors have used the panel generalized method of moments and ordinary least squares (OLS) methods.Findings - The results suggest that macroeconomic factors have a significant impact on exchange rates. The robust findings highlight that improvements in domestic economic and political systems are crucial for a successful exchange rate policy.Originality/value - The existing literature on exchange rate fundamentals have either focused on exchange rates and international trade or investigated the relationship for the developed economies. Covering a period of more than three decades, and using both pooled and panel estimations, our study is unique in terms of its focus on the South Asian economies.

Keywords: South Asian economies; Macroeconomic fundamentals; Exchange rates (search for similar items in EconPapers)
Date: 2019-06-03
Note: View the original document on HAL open archive server: https://hal.science/hal-02559707v1
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Published in Journal of chinese economic and foreign trade studies, 2019, 12 (2), pp.104-119. ⟨10.1108/JCEFTS-01-2019-0007⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02559707

DOI: 10.1108/JCEFTS-01-2019-0007

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