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Governance and exchange rate in Pakistan: A time series analysis

Ullah, Shafqut and Abrar-ul-haq, Muhammad and Ali, Syed Wahid (2016) Governance and exchange rate in Pakistan: A time series analysis. Science International, 28 (1). pp. 557-562. ISSN 1013-5316

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Financial market is more sensitive rather than any other market.The eExchange rate is a more prominent indicator of financial market and it directly affects the whole economy.As globalization increases international dependence also increases many times.So volatility in the exchange rate has a direct effect on the terms of trade.Variance of volatility can be minimized with better governance.The exchange rate is used as a proxy variable for financial markets.Empirical analysis of the impact of governance on exchange rate in Pakistan is uniqueness of study.In this study, we investigated the effects of saving rate, money supply and governance on the exchange rate. This analysis is a time series for the time period of 1980 to 2012.After checking unit root, Auto-Regressive Distributed Lag (ARDL) approach to co-integration is applied.Empirical findings are exploring significant impact of governance on exchange rate in the short run (SR) as well as in the long run (LR) in Pakistan.Results suggest that if governance improves it will bring positive change in the economy through the exchange rate. These results are consistent with the theory.

Item Type: Article
Uncontrolled Keywords: Governance, KU Index, Exchange Rate, Pakistan
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: School of Economics, Finance & Banking
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 15 Aug 2016 08:55
Last Modified: 15 Aug 2016 08:55

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