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Free trade agreements, exhange rates and foreign portfolio investment in pakistan. dynamic causality analysis

Muhammad Anees, Ahmed Jamil () and Faisal Shahzad ()
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Ahmed Jamil: COMSATS Institute of Information Technology
Faisal Shahzad: COMSATS Institute of Information Technology

Economics Bulletin, 2011, vol. 31, issue 1, A8

Abstract: Free trade theory of the international macroeconomics suggests, it will improve international trade conditions in form of improvements in terms of trade through promoting productivity in export oriented industries. The paper investigates the dynamic causality for exchange rates and foreign portfolio investment in a small open economy, Pakistan utilizing quarterly international financial data. It is evident from the preliminary research that free trade agreements has improved conditions for Pakistan, more foreign funding is available to be invested, exports improved and terms of trade for Pakistan has improved. Findings of the paper will help in formulating effective international trade policies promoting industrial production, foreign investment, empolyment in export oriented industries and level of national incomes.

Keywords: Free trade agreement; terms of trade; exchange rates; foreign portfolio investment; Granger causality tests. (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2011-02-14
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