Exchange Rate Volatility and Export Growth in India: An Empirical Investigation
AbstractThis paper empirically investigates the impact of exchange rate volatility on the real exports in India using the ARDL bounds testing procedure proposed by Pesaran et al. (2001). Using annual time series data, the empirical analyses has been carried out for the period 1970 to 2011. The study results confirm that real exports are cointegrated with exchange rate volatility, real exchange rate, gross domestic product and foreign economic activity. Our findings indicate that the exchange rate volatility has significant negative impact on real exports both in the short-run and long-run, implying that higher exchange rate fluctuation tends to reduce real exports in India. Besides, the real exchange rate has negative short-run and positive long-run effects on real exports. The empirical results reveal that GDP has a positive and significant impact on India’s real exports in the long-run, but the impact turns out to be insignificant in the short-run. In addition, the foreign economic activity exerts significant negative and positive impact on real exports in the short-run and long-run, respectively.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43828.
Date of creation: 15 Jan 2012
Date of revision:
Exchange rate volatility; Real exports; India; ARDL-UECM; Cointegration; CUSUM; CUSUMQ;
Find related papers by JEL classification:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F1 - International Economics - - Trade
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- F31 - International Economics - - International Finance - - - Foreign Exchange
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