Research
Factors Influencing Exchange Rate: An Empirical Evidence from Bangladesh
Literature effect of exchange rate fluctuations is caused by some macro-economic variables but there have not enough study in this important field. Our purpose was to generalize the main factors behind exchange rate fluctuations of Bangladesh from 1987-2017. We used ADF and PP test for stationary analysis that is unit root test satisfied preconditions for Johansen co-integrating test. Correlation matrix shows the relationships of independent variables with dependent one and agreed with FMOLS test. We find no serial correlation in Q-statistics, LM and Heteroscedasticity test. Johansen cointegration test specifies that there are no co-integrating equations for long run relationship rather the relationship is short run. VAR model and Ganger causality test shows there is a significant effect of Remittance, GDP growth and International trade to Exchange rate fluctuations because Rsquared values are more than 60%. Wald test supports the VAR model results by ensuring that there also joint effect of independent variables. Results from FMOLS test concluded that GDP growth and International trade positively affect exchange rate. Remittance has negative effect on exchange rate. Finally, we can say that rise in GDP growth and international trade, increase the exchange rate volatility but rise in Remittance reduces the exchange rate volatility. We found the relevance of this study with existing the literature in its related filed.
Economic Growth and Macroeconomic Fundamentals: Evidence from Bangladesh
This study aims to investigate the effect of some macroeconomic variables namely; Interest rate, Real exchange Rate, Money supply (M2) and Trade Openness on economic growth in Bangladesh. The economic growth was represented by real gross domestic product and interest rate was presented by real interest rate in Bangladesh, Real Exchange Rate was presented by Real effective exchange rate and M2 was the proxy of money supply. The periods taken for the study were from year 1987 to year 2017. The study has been conducted using Augmented Dickey-Fuller Unit Root Test, Phillips Perron Test, Johansen Cointegration Test, Vector Error correction Model and Wald Test. The findings of the Study is, there have long run relationship coming from Real exchange rate, Interest rate, Money supply (M2) and Trade openness to economic growth. Besides these, there have casual short term relationship coming from Trade openness and Money supply (M2) to economic growth in Bangladesh.
