THE EMPIRICAL STUDY OF THE RELATIONSHIP BETWEEN EXCHANGE RATE FLUCTUATIONS AND ECONOMIC GROWTH
DOI:
https://doi.org/10.32461/2226-3209.1.2018.177285Abstract
Abstract. The study of causes and factors of growth has always been of particular interest to economists
and several growth models have been designed for it. In theoretical and empirical models, several explanatory variables explain the economic growth. The purpose of many of the empirical studies on economic growth is to determine the importance of the effect of one or a set of explanatory variables on economic growth. On the one hand, exchange rate fluctuations and changes in the value of the national currency against foreign currency are so important that international monetary and financial institutions, especially the IMF, emphasize the need to pay attention to this variable and always recommend interference in the foreign exchange market to reduce fluctuations. Therefore, the present study tries to examine the relationship between exchange rate and its fluctuations, foreign direct investment,
exports and imports with economic growth. The implementation of this study as a case study will be at the level of the Iranian economy, and therefore the available data from 2006 to 2015 comprises its community and its statistical sample. Multivariate linear regression model has been used to test the hypotheses in this study. The results of the study indicate that: (1) exchange rate fluctuations have an adverse effect on economic growth; (2) direct foreign investment has a direct effect on economic growth; (3) foreign exchange does not affect economic growth; (4) exports has a direct impact on economic growth; and (5) imports do not affect economic growth.
Keywords: exchange rate fluctuations, foreign direct investment, foreign exchange rate, exports, imports,
economic growth.
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