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International Journal of Emerging Multidisciplinaries: Mathematics

Corresponding Author

Muhammad Asid

Document Type

Research Article

Subject Areas

Applied Mathematics and Computations

Keywords

Autoregressive, Distributed lag, Exchange Rate, Trade Balance, Koyck Transformation, Pakistan

Abstract

In this study the prime objective is to initiate autoregressive distributed lag transformation for exchange rate and trade balance to avoid the possible existence of multicollinearity among the explanatory variables and to analyze the variation in real exchange rate and its impact on trade balance in Pakistan. The Koyck model was used for studying the immediate impact and long run relationship between the variables by using time series annual data ranging from 1981 to 2021. The result showed that there is an inverse association between the trade balance and the exchange rate. It is evident from the results that the depreciation in exchange rate will bring upward movement in the trade balance.

Receive Date

2021-12-29 11:42:29

Publication Date

1-14-2022

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