Abstract
Exports of a country is one of the main factors indicating economic health of a
country and fluctuating exchange rates and relative price can significantly
affect the level of exports and it is an alarming situation for a country when its
exports are affected by exchange rate volatility. Impact of exchange rate
volatility and relative price on trade has been a heated debate in the field of
finance and most of work has been done on aggregate and bilateral trade. Few
researches are found on product basis especially in the scenario of Pakistan.
This research will provide an overview of the exports of 13 different products
from Pakistan. Secondary data is used to analyze the impact of exchange rate
instability on the exports of different products from Pakistan to all over the
world. Significance of the study depends on the right choice of estimation
method. We use auto regressive distributive lags (ARDL) method to check the
relationship of two main variables. Glass, meat and paper & board products
show that relative price affects negatively to exports so Government should
make policies to strengthen the exports of these three products. Government
can provide subsidies on these products in order to boost up the exports and
make these products competitive in international market. Under the shadow of
our results we conclude that exchange rate volatility has significant negative
relationship with the exports of food processing machinery, grapes, meat and
petroleum products so government needs to be focused on it when exchange
rate are highly instable. Iron & steel bars show short run negative impact of
exchange rate however this impact is adjusted in the long run.
Muhammad Haseeb, Muhammad Awais Iqbal. (2014) EXCHANGE RATE INSTABILITY AND SECTORAL EXPORTS: EVIDENCE FROM PAKISTAN, Paradigms , Vol 8, Issue 1.
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