Impact Of Exchange Rate Misalignment On Inflation And Economic Growth: Evidence From Pakistan
Author: Sajjad Khan

Pakistan is a country that experienced Exchange rate misalignment issues due to chronic inflation and unstable economic prosperity pattern due to international market. After the partition reduced capacity of our economic prosperity created variations in our exchange rate. The previous studies showed the impact of Exchange Rate misalignment without defining the level of ER misalignment which this study fulfilled up to a level. Therefore, this investigation attempts to look at exactly how (RER) misalignment influences Pakistan growth. In such manner, we have not just assessed the immediate effect yet additionally the backhanded/ conditional effect of misalignment on GDP prosperity by utilizing the channel of financial progress. The objective of this study are classified into two categories of finding out the Exchange rate deviation impact on the inflation and Economic prosperity for Pakistan. The study analyzed the power of time series(OLS) ordinary least square regression technique to generate the measure of level of deviation in Exchange Rate for Pakistan and its impact on economic growth. We utilized time series data information going from 1984 to 2020 to do the exact examination. By examining the time series analysis long run RER is computed and then it is used to compute RER misalignment. At last, we assessed the effect of misalignment on per capita GDP growth.The outcomes uncover an antagonistic effect of RER deviation on Pakistan economic growth. Notwithstanding, the study reports that financial development assists in limiting the unfriendly effect of RER deviation, however not completely eradicating it. In view of the experimental findings, the investigation recommends that exchange rate policies should be directed differently. In addition, the financial sector area advancement should be fortified which may help in completely easing the antagonistic effect of RER deviation on economic growth. Supervisor:- Dr.Uzma Zia Co-Supervisor: Dr.Saud Ahmed Khan

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Supervisor: Uzma Zia
Cosupervisor: Saud Ahmed khan

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