Mahdi Safdari*, Seyed Nezamuddin Makiyan**, M. Ibrahim Akbary
Abstract
It is quite
clear that the exchange rate is one of the essential variables in
macroeconomics; hence its fluctuations affect other economic’ variables as
well. The purpose of the current research is to comprehend the effect of
exchange rate fluctuations on Afghanistan’s economic growth using the vector
auto-regression (VAR) model, during the
2009-2023 years. The results of research obviously show that there is a
negative and significant relationship between the exchange rate variable and
the economic development. This is due to the relevancy of the country’s
economy, the industrial, service and agricultural sectors to the import of raw
material and inputs. On the other hand, there is a positive and significant
relationship between the export variable, the formation of fixed gross domestic
capital and economic growth, which means that the increase of exchange rate
through strengthening exports and enlarging the investment capacities will cause
the economic growth. According to the mentioned results, for the
competitiveness of export goods in universal markets and for decreasing the
economy’s dependency to imports, it is requested to utilize the strengthening
import substitution strategy for the development of the country.
Key words: exchange rate, economic growth, exports and (VAR) model.
Systemization JEL: C32, E52, F43