Impact of Exchange Rate on Foreign Trade of Pakistan

DOI

10.2991/febm-19.2019.25How to use a DOI?

Keywords

exchange rate; exports; imports; Vector Error Correction Model VECM

Abstract

This research is based on to test the relationship existence between Exchange rate and foreign trade which are imports and exports of Pakistan using annual data from 1993 to 2017. Vector error correction model consisting of three variables imports, exports, and the exchange rate are used. In this study, the dependent variables are imports and exports, whereas the exchange rate is an independent variable. Augmented Dickey-Fuller (ADF) test is conducted to test the stationary of the data; the VAR lag selection model discloses that lag of order 4 is appropriate for this study. Co-integration, Long-run, and short-run relationship test are investigated by Johansen co-integration. Vector Error Correction Model (VECM) is employed on the sample. The results show that the data is stationary and variables are co-integrated having a long-run relationship with each other. The test results of VECM models states that exports of Pakistan are influenced by the exchange rate in the long-term as well as short-term; however, imports are only controlled by the exchange rate in the long-term.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Malik Muhammad Bilal Khan
AU  - Yulan Du
AU  - Hafiz Muhammad Ali Tahir
PY  - 2019/12
DA  - 2019/12
TI  - Impact of Exchange Rate on Foreign Trade of Pakistan
BT  - Proceedings of the Fourth International Conference on Economic and Business Management (FEBM 2019)
PB  - Atlantis Press
SP  - 69
EP  - 73
SN  - 2352-5428
UR  - https://doi.org/10.2991/febm-19.2019.25
DO  - 10.2991/febm-19.2019.25
ID  - MuhammadBilalKhan2019/12
ER  -