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Macroeconomic fundamentals and exchange rates in South Asian economies : evidence from pooled and panel estimations

Author

Listed:
  • Muhammad Umar Draz

    (Department of Management and Humanities (Universiti Teknologi PETRONAS))

  • Fayyaz Ahmad

    (School of Economics (Lanzhou University))

  • Bhumika Gupta

    (LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], IMT-BS - MMS - Département Management, Marketing et Stratégie - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris])

  • Waqas Amin

    (UO - University of Okara)

Abstract

Purpose - This study aims to examine the impact of macroeconomic fundamentals on exchange rates of selected South Asian economies during 1981-2013.Design/methodology/approach - The authors have used two econometric approaches to the data. For the pooled sample, estimated generalized least square (EGLS) and the two-stage least square method are applied. For the panel data, the authors have used the panel generalized method of moments and ordinary least squares (OLS) methods.Findings - The results suggest that macroeconomic factors have a significant impact on exchange rates. The robust findings highlight that improvements in domestic economic and political systems are crucial for a successful exchange rate policy.Originality/value - The existing literature on exchange rate fundamentals have either focused on exchange rates and international trade or investigated the relationship for the developed economies. Covering a period of more than three decades, and using both pooled and panel estimations, our study is unique in terms of its focus on the South Asian economies.

Suggested Citation

  • Muhammad Umar Draz & Fayyaz Ahmad & Bhumika Gupta & Waqas Amin, 2019. "Macroeconomic fundamentals and exchange rates in South Asian economies : evidence from pooled and panel estimations," Post-Print hal-02559707, HAL.
    • Handle: RePEc:hal:journl:hal-02559707
    DOI: 10.1108/JCEFTS-01-2019-0007
    Note: View the original document on HAL open archive server: https://hal.science/hal-02559707v1
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    References listed on IDEAS

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