Exchange Rate-Economic Growth Nexus under Different Political Regimes and Structural Shocks: Evidence from Pakistan

Muhammad Hafeez, Sadaf Shahab,  M. Tariq Mahmood

Abstract

This study investigates “exchange rate-economic growth nexus within the structural shocks presence and political regime changing” in ranging 1960-2011 in the context of Pakistan. Using sophisticated time series technique, our empirical findings affirmed constructive linkage among exchange rate and economic growth, whether or not the structural shocks occur. Similar inferences are drawn for the changes in political regimes. Our analysis implies that the exchange rate has double edged effect on growth and helps revising trade policy. The extreme events have significant effect on the economy, which require quick restructuring response from the government to avoid resources loss and fiscal imbalance

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