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Granger-causality between real exchange rate and economic growth: evidence from Thailand

Lengnoo, Hayatee and Masih, Mansur (2018): Granger-causality between real exchange rate and economic growth: evidence from Thailand.

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Abstract

In order to know what factors drive economic growth, this paper attempts to examine the Granger-causality relationship between real exchange rate and economic growth using Thailand as a case study. The standard time series techniques are used for the analysis. We found that GDP is an exogenous variable. The result shows that real exchange rate is the endogenous (i.e. ,lagging) variable and could not have an impact on net export and economic growth. On the other hand, economic growth can influence net export and promote real exchange rate stability through net export and foreign reserve. In addition, since economic growth drives net exports, the policies which claim to be able to promote economic growth, such as fiscal and monetary policies, should be beneficial for the policy makers for further study.

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