Granger-causality between real exchange rate and economic growth: evidence from Thailand

Hayatee Lengnoo and Abul Masih

MPRA Paper from University Library of Munich, Germany

Abstract: In order to know what factors drive economic growth, this paper attempts to examine the Granger-causality relationship between real exchange rate and economic growth using Thailand as a case study. The standard time series techniques are used for the analysis. We found that GDP is an exogenous variable. The result shows that real exchange rate is the endogenous (i.e. ,lagging) variable and could not have an impact on net export and economic growth. On the other hand, economic growth can influence net export and promote real exchange rate stability through net export and foreign reserve. In addition, since economic growth drives net exports, the policies which claim to be able to promote economic growth, such as fiscal and monetary policies, should be beneficial for the policy makers for further study.

Keywords: Real exchange rate; Economic growth; VECM; VDC; Thailand (search for similar items in EconPapers)
JEL-codes: C22 C58 E44 (search for similar items in EconPapers)
Date: 2018-02-16
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:111692

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