THE IMPACT OF THE EXCHANGE RATE FLUCTUATIONS ON PAKISTAN’S EXPORT SECTORS: AN EMPIRICAL ANALYSIS BASED ON THE SECTORIAL DATA
Journal Title: Asian Economic and Financial Review - Year 2012, Vol 2, Issue 6
Abstract
This study examines the relationship between the exchange rates and the export sectors of Pakistan. The objective is to study the empirical relationship between the exchange rates and the export sectors. The analysis was conducted on the sectorally segregated monthly data of the exports from July 2003 to April 2010 with nominal exchange rates. The empirical estimation has been resorted to detect both the effects of the nominal exchange rates and the respective volatility of the exchange rates on the export sectors. For the estimation of the long run relationship cointegration and an autoregressive time series regression models are used while generalized autoregressive conditional heteroskedastic methodology has been used to estimate the effects of the exchange rates volatility on export sectors. The results of cointegration and ordinary least square revealed a significant longrun relationship between exchange rates and export sectors, which confirmed that the depreciating currency in case of Pakistan improves the competitiveness of the export sectors, while there is an evidence of volatility effects on the export sectors.
Authors and Affiliations
Abid Ali Shah| PhD Scholar, Faculty of Management Science, International Islamic University, Islamabad, Pakistan., Iftikhar Mehboob| Faculty of Management Sciences, National University of ModernLanguages, Islamabad, Pakistan., Syed Hassan Raza| Associate Professor, Faculty of Business Administration, Allama Iqbal Open University, Islamabad, Pakistan.
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