Impact of Macroeconomic Variables on Exchange Rate: An Evidence from Pakistan

Muhammad Mohsin (), Li Naiwen, Muhammad Kashif Majeed and Sobia Naseem
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Muhammad Mohsin: Liaoning Technical University
Li Naiwen: Liaoning Technical University
Muhammad Kashif Majeed: Liaoning Technical University
Sobia Naseem: Liaoning Technical University

Chapter Chapter 22 in Advances in Time Series Data Methods in Applied Economic Research, 2018, pp 325-333 from Springer

Abstract: Abstract The purpose of this research is to provide the evidence on the relationship between Real Exchange rate (REXR) against US dollar and macroeconomic variables in Pakistan. This study has taken real exchange rate is dependent variable and some other macroeconomic variables are as independent variables. To examine this relationship the ordinary least square regression (OLS) technique is used. This technique was used by Zamir et al. (2017). The results shows that current balance (CB) is negatively significant at 10% level, the inflation and foreign direct investment (FDI) is also negatively significant at 5, 1% respectively. But the Gross domestic product per capita (GDP) is positively significant at 5% level. The Trade openness (OP) shows no important relation with real exchange rate (REXR). Further the ARCH LM test provides result there is no serial correlation and to check the heteroskedasticity whit test is used this test shows the result there is no heteroskedasticity. This study is helpful for international investor and also to increase export for a country.

Keywords: OLS; REXR; Macroeconomic variables; ARCH-LM test; White test (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-02194-8_22

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DOI: 10.1007/978-3-030-02194-8_22

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