Exchange rate volatility, corruption, and economic growth
This study assesses the impact of exchange rate volatility on economic growth using a panel of 194 countries for the period 1995–2019. We resort to dynamic panel data models considering the exchange rate volatility estimated based on GARCH models as an explanatory variable, along with some control v...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Elsevier
2022-12-01
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| Series: | Heliyon |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2405844022036167 |
| _version_ | 1797960866038022144 |
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| author | Josefa Ramoni-Perazzi Héctor Romero |
| author_facet | Josefa Ramoni-Perazzi Héctor Romero |
| author_sort | Josefa Ramoni-Perazzi |
| collection | DOAJ |
| description | This study assesses the impact of exchange rate volatility on economic growth using a panel of 194 countries for the period 1995–2019. We resort to dynamic panel data models considering the exchange rate volatility estimated based on GARCH models as an explanatory variable, along with some control variables such as the level of economic openness and financial development, investment, government spending, and the expected level of education. Countries are grouped according to the level of corruption of the governments. The estimates from both Difference and System Generalized Method of Moments are obtained. The results consistently show a significant negative effect of exchange rate volatility on economic growth, which diminishes as the financial system develops. An important finding is that the effect of volatility is lower in high-corruption countries, which could be because they are used to dealing with the economic instability associated with low levels of governance and incorporate it as part of their costs. |
| first_indexed | 2024-04-11T00:50:52Z |
| format | Article |
| id | doaj.art-29f5d69d1b8141a68ee1f93f8e9e85d2 |
| institution | Directory Open Access Journal |
| issn | 2405-8440 |
| language | English |
| last_indexed | 2024-04-11T00:50:52Z |
| publishDate | 2022-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Heliyon |
| spelling | doaj.art-29f5d69d1b8141a68ee1f93f8e9e85d22023-01-05T08:39:57ZengElsevierHeliyon2405-84402022-12-01812e12328Exchange rate volatility, corruption, and economic growthJosefa Ramoni-Perazzi0Héctor Romero1Corresponding author.; Escuela de Economía y Administración, Universidad Industrial de Santander, ColombiaEscuela de Economía y Administración, Universidad Industrial de Santander, ColombiaThis study assesses the impact of exchange rate volatility on economic growth using a panel of 194 countries for the period 1995–2019. We resort to dynamic panel data models considering the exchange rate volatility estimated based on GARCH models as an explanatory variable, along with some control variables such as the level of economic openness and financial development, investment, government spending, and the expected level of education. Countries are grouped according to the level of corruption of the governments. The estimates from both Difference and System Generalized Method of Moments are obtained. The results consistently show a significant negative effect of exchange rate volatility on economic growth, which diminishes as the financial system develops. An important finding is that the effect of volatility is lower in high-corruption countries, which could be because they are used to dealing with the economic instability associated with low levels of governance and incorporate it as part of their costs.http://www.sciencedirect.com/science/article/pii/S2405844022036167Economic growthExchange rate volatilityCorruptionGMM modelsGARCH models |
| spellingShingle | Josefa Ramoni-Perazzi Héctor Romero Exchange rate volatility, corruption, and economic growth Heliyon Economic growth Exchange rate volatility Corruption GMM models GARCH models |
| title | Exchange rate volatility, corruption, and economic growth |
| title_full | Exchange rate volatility, corruption, and economic growth |
| title_fullStr | Exchange rate volatility, corruption, and economic growth |
| title_full_unstemmed | Exchange rate volatility, corruption, and economic growth |
| title_short | Exchange rate volatility, corruption, and economic growth |
| title_sort | exchange rate volatility corruption and economic growth |
| topic | Economic growth Exchange rate volatility Corruption GMM models GARCH models |
| url | http://www.sciencedirect.com/science/article/pii/S2405844022036167 |
| work_keys_str_mv | AT josefaramoniperazzi exchangeratevolatilitycorruptionandeconomicgrowth AT hectorromero exchangeratevolatilitycorruptionandeconomicgrowth |