Open AccessAnalysis of Current Account and Real Exchange Rate: Lower Middle Income Countries in Association of Southeast Asian Nations
Author(s) -
Hasdi Aimon,
Sri Ulfa Sentosa,
Anggi Putri Kurniadi
Publication year - 2019
Publication title -
international journal of engineering and advanced technology
Language(s) - English
Resource type - Journals
ISSN - 2249-8958
DOI - 10.35940/ijeat.e1093.0585c19
Subject(s) - current account , openness to experience , economics , exchange rate , foreign direct investment , international economics , money supply , investment (military) , development economics , interest rate , monetary economics , macroeconomics , political science , psychology , social psychology , politics , law
The study investigates the simultaneous equation model of the current account and real exchange rates in group of lower middle income in Association of Southeast Asian Nations (ASEAN). This study uses time series from 2000-2017 (18 years) and cross section 6 countries (Indonesia, Philippines, Vietnam, Lao, Myanmar, and Cambodia). There are three important findings in this study; first, for the current account is financial development has positive effect while government spending and foreign direct investment have negative effect; second, for the real exchange rate is economic openness, money supply, and interest rate have positive effect while foreign direct investment and current account have negative effect; third, only current account affects real exchange rates. Therefore, it is highly recommended for group of lower middle income in ASEAN to intervene in monetary policy variables so that uncontrolled deficits and fluctuations can achieve equilibrium in group of lower middle income in ASEAN.