Appropriate Exchange Rate Regime for economic structure of Pakistan

Faran Ali, Dawood Mamoon and Naveed Tahir

MPRA Paper from University Library of Munich, Germany

Abstract: This study empirically finds the appropriate exchange rate regime for economic structure of Pakistan. To find long run association between exchange rate regime and its determinants; ARDL bond testing approach is concern however for the estimation of short run analysis Error correction model (ECM) is applied. Time series data is used over the period from 1984 to 2012. Findings reveal that Trade openness, foreign exchange reserves, rate of inflation and financial development are important determinant while choosing appropriate exchange-rate regime for economy having features like Pakistan. On the basis of analysis, this study suggests that both extreme ends hard peg and free float are unfavorable for it. Still, lot of attention is required on this topic. Choice of regime is a difficult task in empirical analysis because few factors cannot explain actual regime.

Keywords: Exchange Rate Regime (search for similar items in EconPapers)
JEL-codes: E5 E58 (search for similar items in EconPapers)
Date: 2016-10-01
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Journal Article: Appropriate Exchange Rate Regime for Economic Structure of Pakistan (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:74975

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