Skip to content
Research Article Open access CC BY 4.0

Exchange Rate and Economic Growth Nexus: Evidence from Bangladesh

Khairul Alom

Journal of Economics, Management and Trade · pp. 221–232 · Published 5 Oct 2014

10.9734/BJEMT/2015/13133

Abstract

In the paper a close look at exchange rate and economic growth nexus in Bangladesh for a period of 1985-2012 using time series analysis, considering Exchange Rate, FDI, Trade Openness, and Portfolio Equity as explanatory variables and linkage with GDP. We employed Johansen-Juselius cointegration test, multivariate Granger Causality and ADF and PP stationary tests for this purpose. All the variables were found stationary after first differencing both with trend & intercept and no trend. The empirical result shows explanatory variables have significant impact on economic growth in Bangladesh. We also found unidirectional causality, exchange rate to GDP per capita, exchange rate to trade openness and trade openness to GDP per capita in short run. The accumulated response of GDP per capita to exchange rate (ER) and trade openness is positive and significant. So, policy makers in Bangladesh should pay special attention to these areas in order to support economic growth rates.  

FDI exchange rate trade openness gdp growth cointegration

References (36)

  1. 1 On the mechanics of economic development [DOI]
  2. 2 The Nature of the Firm [DOI]
  3. 3 Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root [DOI]
  4. 4 MAXIMUM LIKELIHOOD ESTIMATION AND INFERENCE ON COINTEGRATION — WITH APPLICATIONS TO THE DEMAND FOR MONEY [DOI]
  5. 5 Innovation and Growth in the Global Economy. [DOI]
  6. 6 How does foreign direct investment affect economic growth? [DOI]
  7. 7 Economic Reform and the Process of Global Integration [DOI]
  8. 8 Introduction to Statistical Time Series [DOI]
  9. 9 Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-1985 [DOI]
  10. 10 Openness and growth: A time-series, cross-country analysis for developing countries [DOI]
  11. 11 The Middle Class Consensus and Economic Development [DOI]
  12. 12 Contractionary effects of devaluation [DOI]
  13. 13 Trade orientation, distortions and growth in developing countries [DOI]
  14. 14 Exchange-Rate Volatility and Foreign Trade: Evidence From Thirteen LDC's [DOI]
  15. 15 Real and monetary determinants of real exchange rate behavior: Theory and evidence from developing countries [DOI]
  16. 16 FDI, exports, and GDP in East and Southeast Asia—Panel data versus time-series causality analyses [DOI]
  17. 17 Real Exchange Rate Behavior and Economic Performance in LDCs [DOI]
  18. 18 FDI, Trade Openness, Capital Formation, and Economic Growth in Bangladesh: A Linkage Analysis [DOI]
  19. 19 Tariffs and nontraded goods [DOI]
  20. 20 Impact of Foreign Direct Investment on Export Performance in India [DOI]
  21. 21 EFFECT OF TRADE LIBERALIZATION ON ECONOMIC GROWTH OF DEVELOPING COUNTRIES: A CASE OF BANGLADESH ECONOMY
  22. 22 Budget deficits and the value of the dollar: An application of cointegration and error-correction modeling [DOI]
  23. 23 Real Exchange Rate Volatility and Foreign Trade: Evidence From South Africa's Exports to the United States
  24. 24 Real and nominal determinants of real exchange rates in Latin America: Short-run dynamics and long-run equilibrium [DOI]
  25. 25 The Link between Real Exchange Rate and Export Earning: A Cointegration and Granger Causality Analysis on Bangladesh.
  26. 26 Impact of Foreign Direct Investment, Trade Openness, Domestic Demand, and Exchange Rate on the Export Performance of Bangladesh: A VEC Approach [DOI]
  27. 27 Markets and Hierarchies: Analysis and Antitrust Implications. [DOI]
  28. 28 Geography and Trade
  29. 29 Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence [DOI]
  30. 30 Real exchange rates, devaluation, and adjustment: exchange rate policy in developing countries [DOI]
  31. 31 How Does Foreign Direct Investment Affect Economic Growth? [DOI]
  32. 32 Foreign Direct Investment in South Asia: Policy, Trends, Impact and Determinants
  33. 33 Real Exchange Rate Behavior and Economic Growth: Evidence from Egypt, Jordan, Morocco, and Tunisia [DOI]
  34. 34 " On the Dynamics of Exports and FDI: The Spanish Internationalization Process"
  35. 35 Have Trade Policy Reforms Led to Greater Openness in Developing Countries? [DOI]
  36. 36 Asymmetric cointegration relationship between real exchange rate and trade variables: The case of Malaysia

Cited by 1

Article metrics

Real usage data collected on this platform.

63

Page views

0

PDF downloads

29

Outbound clicks

1

Citations

Views over time

Views by country

Approximate, from request IP at view time — not citizenship or institution. Countries with fewer than 5 views are grouped as "Other".

Traffic sources

Referring site, by host.

Views and downloads exclude known bots/crawlers. Citations combines this platform's own DOI-resolved index with each external source's own reported total — see Cited by above for individually listed citing works. Last refreshed 0 seconds ago.