MS/M.Phil Economics

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Appropriate Exchange Rate Regime for economic structure of Pakistan (Time Series Analysis for Pakistan)
(UMT.Lahore, 2016) Faran Ali
Auto-regressive distributed lagged model (ARDL) is used in present study to find appropriate exchange rate regime for economic structure of Pakistan. For the estimation of model, time series data is used over the period from 1984 to 2012. Our study confirmed that openness, foreign exchange reserves, rate of inflation and financial development are important determinant while choosing appropriate exchange-rate regime for economy having features like Pakistan. On the basis of analysis, we suggest both extreme ends hard peg and free float are unfavorable for it. In addition, study also finds that in case of Pakistan, political institutions are not as important as economic institutions as in our study governance and political stability were found insignificant. Still, lot of attention is required on this topic. Choice of regime is a difficult task in empirical analysis because few factors cannot explain actual regime.