Assessing the Impact of Exchange Rate Fluctuations on Economic Growth: A Comprehensive Analysis – Shanu Kumar, Kailash Chandra Pradhan
Abstract
This paper investigates the impact of exchange rate volatility on economic growth in India, using an ARDL model to assess both short- and long-term effects. The results reveal that exchange rate volatility has a significant negative impact on GDP in the long run, supporting the theory that fluctuations in exchange rates hinder trade and economic performance. Additionally, factors such as foreign direct investment (FDI) inflows and the Gross Enrollment Ratio (GER) show a notable influence on growth. The paper concludes with policy recommendations, emphasizing the importance of exchange rate stability, encouraging FDI, improving education, and promoting trade openness for sustainable economic growth.
Keywords:Exchange Rate, Volatility, ARDL Model, FDI Inflows, GDP.