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

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  • Lengnoo, Hayatee
  • Masih, Mansur

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.

Suggested Citation

  • Lengnoo, Hayatee & Masih, Mansur, 2018. "Granger-causality between real exchange rate and economic growth: evidence from Thailand," MPRA Paper 111692, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111692
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    References listed on IDEAS

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    More about this item

    Keywords

    Real exchange rate; Economic growth; VECM; VDC; Thailand;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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