The Impact of Macroeconomic Variables on the Economic Growth of Afghanistan (ARDL Approach)

Abstract

Increasing economic growth is one of the most important goals of policies pursued by governments. Investigating the relationship between macroeconomic variables and economic growth is one of the important topics in macroeconomics literature. Therefore, the current research has investigated the effect of macroeconomic variables (unemployment rate, foreign direct investment, export, inflation, exchange rate, government spending) and the economic growth of Afghanistan during the years 2000-2019. For this purpose, in this research, long-term and short-term relationships between variables have been investigated using the ARDL. The results obtained from the estimation of short-term and long-term models show that there is a relationship between macroeconomic variables and economic growth. The results of the research explain that the variables of unemployment rate, inflation, exchange rate, foreign direct investment in the long and short term have shown a negative effect on Afghanistan's growth and the variable of export and government spending in the long and short term have a negative effect. It has shown a positive effect on Afghanistan's economic growth. The long-term model estimation results show that the export variable has the most positive effect on Afghanistan's economic growth, and the exchange rate and unemployment rate have the most negative effect on Afghanistan's economic growth.