Pakistani Real Exchange Rate System: An Empirical Analysis

Author: aChu V. Nguyen, bMuhammad Mahboob Ali* and cS.K.S. Yadav aEconomics and Finance and Chairman, FACIS Department, College of Business, University of Houston-Downtown, 320 North Main St., Suite 410-D, Houston, Texas Email Id: nguyenchu@uhd.edu bDepartm

Abstract:
This paper intends to evaluate the consequences of the real exchange rate system of Pakistan in terms of considering the USA relationship. Research question of the study is whether real exchange rate in Pakistan is being effectively handled to observe the competitiveness of the country in trading with the USA? Time period of the study is January 1987 to April 2015. Authors found that the Pakistani has been very successful in using its exchange rate policy to maintain the country’s competitive position in the bilateral export market with the USA. Political instability, terrorism, bureaucratic cost, easing policies for doing business and their impact may also be measured as it has negative impact on the economic productivity, efficiency and effectiveness on Pakistani economy.

Keywords:Real exchange rate, Bilateral trade, Pakistani economy, Equilibrium Real Effective Exchange Rate (ERER)

DOI:

International Journal of Trade & Commerce (Vol: 4 Issue:2)