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Journal of Economic Integration 2018 June;33(2) :1302-1336.
DOI: https://doi.org/10.11130/jei.2018.33.2.1302
Exchange Rate Volatility and Economic Growth
Achouak Barguellil
Ousama Ben-Salha and 
Mourad Zmami 
University of Tunis El Manar, Tunis, Tunisia
Northern Border University, Arar, Saudi Arabia & University of Sousse, Sousse, Tunisia
Northern Border University, Arar, Saudi Arabia & University of Tunis, Sousse, Tunisia
Corresponding Author: Ousama Ben-Salha ,Email: oussama.bensalha@isgs.rnu.tn, ousama.bensalha@gmail.com
Copyright ©2018 Journal of Economic Integration
ABSTRACT
This paper examines the impact of exchange rate volatility on economic growth. An empirical investigation based on a sample of 45 developing and emerging countries over the period of 1985~2015 is conducted using the difference and system generalized method of moments estimators. Findings suggest that the generalized autoregressive conditional heteroskedasticity-based measure of nominal and real exchange rate volatility has a negative impact on economic growth. Also, the effect of exchange rate volatility depends on the exchange rate regimes and financial openness, that is, volatility is more harmful when countries adopt flexible exchange rate regimes and financial openness.

JEL Classification
F43: Economic Growth of Open Economies
F31: Foreign Exchange
C23: Models with Panel Data; Longitudinal Data; Spatial Time Series
Keywords: Economic Growth | Exchange Rate Volatility | Developing Countries | Financial Openness | Exchange Rate Regime
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