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Effect of exchange rate policy on GDP and GDP components: The Kyrgyz Republic Case

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  • Fuat SEKMEN

    (Kyrgyzstan – Turkish Manas University, Kyrgyzstan (Sakarya University, Faculty of Political Science))

  • Nurbek MADMAROV

    (Kyrgyzstan – Turkish Manas University, Institute of Social Sciences, Kyrgyzstan)

Abstract

The choice of exchange rate regimes in the countries to take advantage of stabilization policies was quite difficult. After the breakdown of the USSR, the KR among the former member countries in the Central Asia was the first to introduce its national currency on 10th of May 1993. After that time, it has done several adjustments in the exchange rate policy to preserve the value of the som from external shocks. In the study, the effectiveness of the exchange rate policy on GDP and GDP components is examined by using the ARDL model by Pesaran et al. (2001). The estimation results show that the depreciation of som has positive significant short- and long-run effects on GDP growth. However, while it has insignificant effect on most of the GDP component variables in the short-run, it has negative significant long-run effect.

Suggested Citation

  • Fuat SEKMEN & Nurbek MADMAROV, 2018. "Effect of exchange rate policy on GDP and GDP components: The Kyrgyz Republic Case," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(614), S), pages 137-166, Spring.
    • Handle: RePEc:agr:journl:v:1(614):y:2018:i:1(614):p:137-166
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    References listed on IDEAS

    as
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