Agricultural Export and Economic growth: Evidence from Pakistan

Abstract

This study is conducted to investigate the impact of exchange rate fluctuations on consumer price inflation in selected group of 13 developing countries for period ranging from 1980 to 2019. The study also tests for the existence of asymmetric effects of currency appreciation and depreciation on consumer price inflation. The essence of such asymmetric effects is the downward rigidity of consumer prices as proposed by Keynesian economics. Linear Auto regressive and Distributed Lag Model (ARDL) is used to estimate the short run and long-run pass-through to consumer prices while non-linear ARDL is used to check the existence of asymmetric effects. The empirical evidence establishes partial pass-through to consumer prices in the selected countries. We found strong evidence of existence of asymmetric effects of exchange rate fluctuations on consumer price inflation in all of the countries used in the study. Based on the established results the study suggests keen vigilance of monetary authorities to ensure exchange rate stability.