Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan
The current study investigates the real influence of the rate of exchange in real terms, GDP in real terms, money supply and infrastructure on the balance of trade in Pakistan by employing Johnson co-integration and ECM. The real GDP and infrastructure positively affected mini missing the gap of trade deficit to improve the trade performance of the economy of Pakistan.In contrast, the factor of effective exchange rate and money supply negatively affected on trade deficit of the country. The rate of R-Square is 0.85, it tells that 85 percent variation in the balance of trade is captured by independent variables.The important recommendation of this research is that the exchange rate should be stable and consistent with the equilibrium path. The negative ECM value of -40 obviously pointed out that there is a 40 percent convergence of the total said parameters in mini missing the gap of trade deficit for the economy of Pakistan.
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Trade Balance, Exchange Rate, Annual Data
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(1) Allah Bux Lakhan
Lecturer, Government Degree College Ghotki, Sindh, Pakistan.
(2) Zulfiqar Ali Keeryo
Economic Growth Advisor, Research and Training Wing, Planning and Development Department, Government of Sindh, Karachi, Sindh, Pakista
(3) Jazib Mumtaz
PhD Scholar, Department of Social Sciences Economics, Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Karachi, Sindh, Pakistan.
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Cite this article
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APA : Lakhan, A. B., Keeryo, Z. A., & Mumtaz, J. (2022). Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan. Global Social Sciences Review, VII(II), 348-354. https://doi.org/10.31703/gssr.2022(VII-II).35
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CHICAGO : Lakhan, Allah Bux, Zulfiqar Ali Keeryo, and Jazib Mumtaz. 2022. "Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan." Global Social Sciences Review, VII (II): 348-354 doi: 10.31703/gssr.2022(VII-II).35
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HARVARD : LAKHAN, A. B., KEERYO, Z. A. & MUMTAZ, J. 2022. Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan. Global Social Sciences Review, VII, 348-354.
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MHRA : Lakhan, Allah Bux, Zulfiqar Ali Keeryo, and Jazib Mumtaz. 2022. "Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan." Global Social Sciences Review, VII: 348-354
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MLA : Lakhan, Allah Bux, Zulfiqar Ali Keeryo, and Jazib Mumtaz. "Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan." Global Social Sciences Review, VII.II (2022): 348-354 Print.
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OXFORD : Lakhan, Allah Bux, Keeryo, Zulfiqar Ali, and Mumtaz, Jazib (2022), "Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan", Global Social Sciences Review, VII (II), 348-354
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TURABIAN : Lakhan, Allah Bux, Zulfiqar Ali Keeryo, and Jazib Mumtaz. "Exchange Rate, Monetary Policy and Balance of Trade: An Empirical Investigation of Pakistan." Global Social Sciences Review VII, no. II (2022): 348-354. https://doi.org/10.31703/gssr.2022(VII-II).35