EXCHANGE RATE AND ECONOMIC STABILITY DURING CRISES: CASE STUDY SYRIA

Abstract

The aim of this article is to measure the impact of the fluctuations in the real exchange rate of the Syrian pound on the key macroeconomic indicators of the Syrian economy during the period 1961-2020 to analyze the role of the real exchange rate in achieving economic stability. Since 2011, the Syrian economy suffered from a devastating war that effected all economic and social aspects of business activities leading to high fluctuations and instability of the macroeconomic ecosystem. During the first 40 years of study, the political stability in Syria has not been translated into economic stability on at the macroeconomic level. Moreover, during the last 11 years, the political instability has worsened the economic situation. To achieve the objective of this study, we applied autoregressive model and simple regression model on a various macroeconomic variables including the real exchange rate. The results show that the real exchange rate has a significant positive impact on the balance of payment, inflation, GDP gap, and negative impact on Real GDP, unemployment rate, monetary supply (M2).