The Impact of Monetary Policies on the Exchange Rate: A GMM Approach

Amir Khordehfrosh Dilmaghani () and Amir Mansour Tehranchian ()
Additional contact information
Amir Khordehfrosh Dilmaghani: Department of Economics, University of Mazandaran, Iran.
Amir Mansour Tehranchian: Department of Economics, University of Mazandaran, Iran.

Iranian Economic Review (IER), 2015, vol. 19, issue 2, 177-191

Abstract: This paper investigates the impact of monetary policies on the exchange rate of selected developing countries during the period 2001-2010. For this purpose, in addition to the theoretical explanation, dynamic panel data based on the generalized method of moments (GMM) have been used to estimate the model. Our findings indicate that the lag of exchange rate variable has a positive and significant effect on the exchange rate. This result reflects the dynamics of the exchange rate over time. Additionally, this paper indicates that the coefficient of liquidity as an indicator of monetary policy is positive and significant. Moreover, GDP, inflation, and exports of goods and services have negative, positive, and negative effects on the exchange rate, respectively, and all are statistically significant. Paying more attention to the exchange rate and the optimal control of liquidity in the economy is suggested as a policy recommendation in this research.

Keywords: Developing Countries; Exchange Rate; Generalized Method of Moments (GMM); Monetary Policies. (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
ftp://80.66.179.253/eut/journl/20152-5.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:19:y:2015:i:2:p:177

Access Statistics for this article

Iranian Economic Review (IER) is currently edited by Dr.Hossien Abbasinejad

More articles in Iranian Economic Review (IER) from Faculty of Economics,University of Tehran.Tehran,Iran Contact information at EDIRC.
Bibliographic data for series maintained by [z.rahimalipour] ().