 On the Relationship between the Nominal Exchange Rate and Export Demand in IndiaRanajoy Bhattacharyya and Bipradas Rit South Asian Journal of Macroeconomics and Public Finance, 2018, vol. 7, issue 2, 260-282 Abstract: This article attempts to determine the effect of nominal exchange rates on Indian exports between 1996 and 2014. We begin by assuming that the nominal exchange rate can affect export directly as well as indirectly via its pass through on domestic prices. The analysis is conducted with quarterly data after controlling for the effect of exchange rate volatility on exports. The main results that we get are the following: There is no direct evidence that the nominal exchange rate or its volatility influences exports. However, there is a significant relationship between the relative price ratio (domestic to foreign) and export. Further, we find strong evidence of pass through of the nominal exchange rate on prices (about 54%) in the long run. We interpret this result as an evidence of the nominal exchange rate affecting exports indirectly through domestic prices. The results suggest that the debate on the influence of exchange rates on Indian export is still an open one. JEL Classification: F14, E31, G15 Keywords: Export; nominal exchange rate; consumer price index; exchange rate pass through (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:smppub:v:7:y:2018:i:2:p:260-282 Access Statistics for this article More articles in South Asian Journal of Macroeconomics and Public Finance |
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