Dynamics of Economic Policy Uncertainty and Exchange Rate: Evidence from Pakistan

Rimsha Falak, Faiz Rasool, Muhammad Mudassar Hussain and Muhammad Ahmad Raza
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Rimsha Falak: National Business School, The University of Faisalabad, Pakistan
Faiz Rasool: Institute of Business Management Sciences, University of Agriculture Faisalabad, Pakistan
Muhammad Mudassar Hussain: Lyallpur Business School, Government College University, Faisalabad, Pakistan
Muhammad Ahmad Raza: Institute of Business Management Sciences, University of Agriculture Faisalabad, Pakistan

Bulletin of Business and Economics (BBE), 2024, vol. 13, issue 2, 925-931

Abstract: The Pakistani economy has encountered substantial exchange rate volatility due to many endogenous and exogenous shocks, including adopting different exchange rate systems, the global financial crisis, sanctions, and the COVID-19 pandemic. Data was collected from the period of 2002 to 2023. Exchange rate Volatility was used as a dependent variable, whereas Trade Volume, Oil Price, and Economic Policy Uncertainty were used as independent variables. Numerous economic techniques, such as Descriptive Statistics, OLS, Unit Roots, and Quantile Regression, were used while using the EViews software to get the desired results. Secondary data was collected from Authentic sources in Pakistan. The analysis utilizes the technique of linear regression to present statistics on the results, along with a unit root test. The finding revealed a negative impact of ERV (Exchange Rate Volatility) on the EPU; however, the outcomes confirmed a positive effect of Oil price and Trade Volume on Economic Policy Uncertainty. Unit roots results describe that data is stationary for all the selected variables, which means that the null hypothesis is accepted. The findings confirmed that the Pakistani currency appreciates the rise in international oil prices and trade in Pakistan. Government officials and policymakers can benefit from the insights and suggestions provided by this study to traverse the difficulties and seize the chances of creating Pakistan's economic policies. Governments, legislators, and other pertinent stakeholders may find our study's conclusions helpful.

Keywords: Exchange Rate; Oil Price; Trade volume (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:rfh:bbejor:v:13:y:2024:i:2:p:925-931

DOI: 10.61506/01.00410

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