Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal
<p>This paper attempts to empirically investigate the presence of a cointegrating relationship between the exports, imports, and the USD exchange rate in Nepal using the yearly time series data from 1965 to 2017. Time series properties of the data are diagnosed using the Augmented Dickey-Fulle...
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doaj-a6503975c2a94b63b6a90c30a1125ee52020-11-25T02:15:08ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382019-03-01922732763793Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from NepalMitra Lal Devkota0Humnath Panta1Mike Cottrell College of Business University of North Georgia Dahlonega, GA 30597, USACollege of Business and Communication Brenau University Gainesville, GA 30501, USA<p>This paper attempts to empirically investigate the presence of a cointegrating relationship between the exports, imports, and the USD exchange rate in Nepal using the yearly time series data from 1965 to 2017. Time series properties of the data are diagnosed using the Augmented Dickey-Fuller unit root test and Johansen’s multivariate cointegration test. The findings indicate that there exists no cointegrating relationship between exports, imports, and the USD exchange rate in Nepal, and hence, no causal relationships within vector error correction model (VECM) can be estimated for Nepal. The lack of cointegration implies that macroeconomic policies of Nepal have been ineffective in bringing exports and imports in long-run equilibrium, and thus, Nepal is in violation of her international budget constraint. These findings may have important implications for decision- making by national policymakers.</p><p><strong>Keywords:</strong> Exports, Imports, International Budget Constraint</p><p><strong>JEL Classifications:</strong> F41, C22, C32</p><p>DOI: <a href="https://doi.org/10.32479/ijefi.7588">https://doi.org/10.32479/ijefi.7588</a></p>https://www.econjournals.com/index.php/ijefi/article/view/7588 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Mitra Lal Devkota Humnath Panta |
spellingShingle |
Mitra Lal Devkota Humnath Panta Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal International Journal of Economics and Financial Issues |
author_facet |
Mitra Lal Devkota Humnath Panta |
author_sort |
Mitra Lal Devkota |
title |
Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal |
title_short |
Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal |
title_full |
Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal |
title_fullStr |
Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal |
title_full_unstemmed |
Are Exports, Imports, and Exchange Rates Cointegrated? Empirical Evidence from Nepal |
title_sort |
are exports, imports, and exchange rates cointegrated? empirical evidence from nepal |
publisher |
EconJournals |
series |
International Journal of Economics and Financial Issues |
issn |
2146-4138 |
publishDate |
2019-03-01 |
description |
<p>This paper attempts to empirically investigate the presence of a cointegrating relationship between the exports, imports, and the USD exchange rate in Nepal using the yearly time series data from 1965 to 2017. Time series properties of the data are diagnosed using the Augmented Dickey-Fuller unit root test and Johansen’s multivariate cointegration test. The findings indicate that there exists no cointegrating relationship between exports, imports, and the USD exchange rate in Nepal, and hence, no causal relationships within vector error correction model (VECM) can be estimated for Nepal. The lack of cointegration implies that macroeconomic policies of Nepal have been ineffective in bringing exports and imports in long-run equilibrium, and thus, Nepal is in violation of her international budget constraint. These findings may have important implications for decision- making by national policymakers.</p><p><strong>Keywords:</strong> Exports, Imports, International Budget Constraint</p><p><strong>JEL Classifications:</strong> F41, C22, C32</p><p>DOI: <a href="https://doi.org/10.32479/ijefi.7588">https://doi.org/10.32479/ijefi.7588</a></p> |
url |
https://www.econjournals.com/index.php/ijefi/article/view/7588 |
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