Author Archives | najia.saqib

The Effect of Exchange Rate Fluctuation on Trade Balance: Empirical Evidence from Saudi Arab Economy

Fluctuation of the exchange rate has a different unwanted implication towards the economic growth. The right choice of exchange rate regime will bring an economy back to the equilibrium and many economists claim that it is one of the factors for the positive economic development. In contrast, a long term fluctuation of the real exchange rate from the nominal rate can lead to severe macroeconomic imbalances, lead to speculation attack and against the orthodoxy of macroeconomic parities. However the empirical findings of previous studies with regards to the relationship of exchange rate and trade balance are not inclusive and are inconsistent for different countries. The main objective of this paper is to analyse the long run relationship between fluctuation of exchange rate and trade balance in Saudi Arab. The economy of the Saudi Arab has developed tremendously in which the average gross domestic production (GDP) for the period of 1980 – 2008 is more than 300 percentages. Using the Purchasing Power Parity (PPP) model, we empirically identify that the currency of Saudi Arabia at most of the time are overvalued. The study also shows Saudi Arab is enjoying positive trade balance. Utilising two-step Engel-Granger co-integration technique we find a significant long run relationship between the exchange rate fluctuation and trade balance for Saudi Arab in the long run but not in the short-run.

  The Effect of Exchange Rate Fluctuation on Trade Balance: Empirical Evidence from Saudi Arab Economy (269.9 KiB, 5,439 hits)

Posted in Economics, Volume IV, Issue no. 1Comments Off on The Effect of Exchange Rate Fluctuation on Trade Balance: Empirical Evidence from Saudi Arab Economy

Impact of Development and Efficiency of Financial Sector on Economic Growth: Empirical Evidence from Developing Countries

This paper analyses the impact of development and efficiency of financial sector on economic growth of a group of selected developing countries using a cross-country data averaged over the period 2005-2009. The results show that the impact of financial sector efficiency on economic growth is significantly positive for developing countries. For a sample of 50 developing countries the effect of financial sector development and financial sector efficiency is positive and highly significant. The sensitivity analysis also shows that the relationship remain positive and significant no matter what combination of the omitted variables are used in the basic model. Thus, our findings support the core idea that development and efficiency of financial sector stimulates economic growth.

  Impact of Development and Efficiency of Financial Sector on Economic Growth: Empirical Evidence from Developing Countries (701.6 KiB, 5,267 hits)

Posted in Economics, Volume III, Issue no. 3Comments Off on Impact of Development and Efficiency of Financial Sector on Economic Growth: Empirical Evidence from Developing Countries