Open AccessExchange Rate Volatility and Domestic Consumption: A Comparative Study of Developed, Developing and Emerging Economies
Author(s) -
Muhammad Zubair Chishti,
Hafiz Syed Muhammad Azeem,
Farrukh Mahmood,
Adeel Ahmed Sheikh
Publication year - 2019
Publication title -
international journal of accounting and financial reporting
Language(s) - English
Resource type - Journals
ISSN - 2162-3082
DOI - 10.5296/ijafr.v9i3.15248
Subject(s) - economics , volatility (finance) , exchange rate , emerging markets , panel data , monetary economics , consumption (sociology) , developing country , econometrics , macroeconomics , economic growth , social science , sociology
The current study endeavors to explore the effects of oscillations in the exchange rate on the household aggregate consumption of developed, emerging, and developing economies, employing the panel data from 1995 to 2017. To select an appropriate panel data estimation technique, we apply Brush-Pagan & Hausman Tests for each set of chosen economies. Further, our study deduces that, in the case of developed economies, the oscillations in the exchange rate, significantly, affect the domestic consumption, supporting Alexander’s (1952) conjecture. However, in the case of emerging and developing economies, aggregate consumption does not respond to the exchange rate volatility.