Abstract
This paper aims to investigate the determinants of real exchange rate, using quarterly Indian data covering the period from 1978Q4 to 2013Q4. The study employs Johansen cointegration analysis in estimating the long run determinants of real exchange rate. The empirical results suggested that the real exchange rate is influenced by foreign exchange reserves, government consumption and openness. Granger Causality of Vector Error Correction Model results suggested that there is long run unidirectional causality running from foreign exchange reserves to real effective exchange rate, government consumption and trade openness. There is also a unidirectional causality running from openness to real effective exchange rate, foreign exchange reserves and government consumption.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
