Original scientific paper
https://doi.org/10.1080/1331677X.2022.2059692
Revisiting the nexus between exchange rate, exports and economic growth: further evidence from Asia
Wei Zhu
Fayyaz Ahmad
Muhammad Umar Draz
Ilhan Ozturk
Abdul Rehman
Abstract
The economic growth of developing countries has been associated with their exports, and the existing research suggests that
exchange rates significantly influence the exports. This study used
panel data to investigate the potential nexus of gross domestic
product (GDP), exports and exchange rates in Asian countries
over the period of 1981–2016. The results portray that nexus
between exchange rate and exports holds true for Export-led
Growth (ELG) and Growth-led Exports (GLE) hypotheses. This
study used the Wald test under Vector Error Correction Model
(VECM) with all necessary specifications tests to identify the possible nexus of variables, and applied the fixed effects model along
with control variables. The results imply that an undervalued currency enhances exports and has a significant impact on economic
growth. Additionally, the results of Fully Modified Ordinary Least
Squares (FMOLS) model with financial crises dummy suggested
that the estimations are robust. Keeping in view the aforementioned findings, a timely and balanced policy can play a pivotal
role in improving the long term nexus of exchange rates, exports
and economic growth.
Keywords
Asia; developing countries; economic growth; exchange rates; exports
Hrčak ID:
303034
URI
Publication date:
31.3.2023.
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