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​Does Exchange Rate Volatility Matter for Economic Growth? Evidence from Selected Asia-Pacific Economies

This study examines the impact of exchange rate volatility on economic growth in eleven Asia-Pacific economies from 2002 to 2022. Using the Autoregressive Distributed Lag model, our findings show that the short-run and long-run effects of exchange rate volatility on economic growth vary, and that exchange rate volatility is not necessarily deleterious to economic growth. Importantly, there is an indication of an inverted-U relationship between economic growth, and exchange rate volatility, where low levels of volatility have a positive impact on economic growth, but higher degrees of volatility exert a negative impact. Our results imply no clear-cut relationship between exchange rate volatility and economic growth.


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