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The impact of exchange rate regimes on economic growth: Empirical study of a set of developing countries during the period 1974–2006

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  • Majidah Ashour
  • Chen Chen Yong

Abstract

An increment in the quantity of services/goods manufactured per-head of the population over time denotes economic growth of a country. Exchange Rate Intermediate Regimes are unable to continue under conditions of capital movement. To examine the relationship between exchange rate regimes and economic growth. This study has kept its focus on the economic growth of a set of developing countries during the years (1974–2006). Fixed effects and pooled regression for 16 developing countries have been incorporated as the methodologies techniques for data. Analysis of data was performed through SPSS. A relationship between exchange rate regimes and economic growth has been identified through statistical approaches. The results indicated that as compared to flexible exchange regime, growth rate was higher by 1.2% when fixed exchange regime was adopted; and a growth rate of 0.64% was achieved under the intermediate regime when compared with the flexible regime. A positive impact has been identified in exchange rate regimes upon economic growth of the developing countries. Countries following the flexible exchange rates are facing scarcity for the existence of advanced financial systems, which deprives them of enjoying the benefits of flexible regime.

Suggested Citation

  • Majidah Ashour & Chen Chen Yong, 2018. "The impact of exchange rate regimes on economic growth: Empirical study of a set of developing countries during the period 1974–2006," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(1), pages 74-90, January.
    • Handle: RePEc:taf:jitecd:v:27:y:2018:i:1:p:74-90
    DOI: 10.1080/09638199.2017.1339117
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    References listed on IDEAS

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    1. Jeffrey A. Frankel & Andrew K. Rose, 2000. "Estimating the Effect of Currency Unions on Trade and Output," NBER Working Papers 7857, National Bureau of Economic Research, Inc.
    2. John Williamson, 2000. "Exchange Rate Regimes for Emerging Markets: Reviving the Intermediate Option," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa60, October.
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    Cited by:

    1. Dąbrowski, Marek A. & Papież, Monika & Śmiech, Sławomir, 2021. "Output volatility and exchange rates: New evidence from the updated de facto exchange rate regime classifications," MPRA Paper 107133, University Library of Munich, Germany.
    2. Cruz-Rodríguez, Alexis, 2022. "Exchange arrangements and economic growth. What relationship is there?," MPRA Paper 113897, University Library of Munich, Germany.
    3. Klaus Schmidt-Hebbel, 2019. "Macroeconomic Institutions: Lessons from World Experience for MENA Countries," Working Papers 1311, Economic Research Forum, revised 21 Aug 2019.

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