Do Exchange Rates Affect Exports in India?

Ranajoy Bhattacharyya and Jaydeep Mukherjee ()

South Asian Journal of Macroeconomics and Public Finance, 2014, vol. 3, issue 2, 175-193

Abstract: It is shown that the 36 country real effective exchange rate (REER) of India, which is I (1), becomes stationary once a single exogenous shock (corresponding to the implementation of the liberalization policy by the government of India) is separated from its stochastic component and modelled as a break in the deterministic trend. The implication of this for the export supply function is enormous. While without the break real export has a long-run relationship with REER and gross domestic product, with the break the relationship no more exists. JEL Classification: F31, C32, F41

Keywords: Real exports; real effective exchange rate; structural breaks; unit root; cointegration (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:sae:smppub:v:3:y:2014:i:2:p:175-193

DOI: 10.1177/2277978714548631

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