Volatility of Exchange Rate Effecting Trade Growth: A Case of Pakistan with US, UK and UAE

Posted: 22 Apr 2013

See all articles by Marria Hassan

Marria Hassan

National Defence University; IIUI

Date Written: April 12, 2013

Abstract

Primary objective of this paper is to investigate fluctuations in trade of Pakistan resulting from volatility in exchange rate of three of the major trading partners including United States of America, United Kingdom, and the United Arab Emirates. This paper covers a longer period of time from 1988:8 to 2011:6 using monthly data. ADF is used to check stationarity of the variables, Garch estimates volatility of exchange rate, co-integration measures long run relationship, VECM estimates adjustment in trade growth in short run due to change in exchange rate. Empirical results show a negative effect between trade growth and exchange rate.

Keywords: Bretton wood's System, ADF, VECM, stationarity

Suggested Citation

Hassan, Marria, Volatility of Exchange Rate Effecting Trade Growth: A Case of Pakistan with US, UK and UAE (April 12, 2013). Available at SSRN: https://ssrn.com/abstract=2254504

Marria Hassan (Contact Author)

National Defence University ( email )

Islamabad
Pakistan

IIUI ( email )

PO Box 1243
Islamabad, Islamabad Capital Territory 46000
Pakistan

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