Measuring real exchange rate misalignment: an industry-level analysis of Pakistan using ARDL approach

Aqsa Shaukat, Eatzaz Ahmad and Waseem Shahid Malik

Cogent Business & Management, 2022, vol. 9, issue 1, 2148871

Abstract: Having an exchange rate close to its equilibrium is critical for foreign investors and policymakers during times of macroeconomic instability. This study measures the real exchange rate (RER) misalignment in eight Pakistani manufacturing industries from January 2002 to June 2020. The ARDL approach is used to examine the long-run relationship between the RER and its fundamentals in each industry. The findings show that government spending and interest rates significantly explain RER at the aggregate and industrial levels. Furthermore, the misalignment of RER varies significantly across industries. Some industries have highly misaligned RER, while others have close to zero misalignments. These findings can assist us in making fiscal policy and competitive devaluation decisions to improve the trade deficit.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/23311975.2022.2148871 (text/html)
Access to full text is restricted to subscribers.

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:taf:oabmxx:v:9:y:2022:i:1:p:2148871

Ordering information: This journal article can be ordered from
http://cogentoa.tandfonline.com/journal/OABM20

DOI: 10.1080/23311975.2022.2148871

Access Statistics for this article

Cogent Business & Management is currently edited by Len Tiu Wright and Tahir Nisar

More articles in Cogent Business & Management from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().