Investigating role of monetary policy and exchange rate momentum on net exports in selected developing countries

Monetary and credit policies constitute a part of the country s economic policies through which the country s monetary authorities try to control the money supply in a coordinated manner with other economic policies that is in line with the goals of the country. The exchange rate is a variable that is more closely related to the foreign sector than other variables. The value of the currencies of the countries is not only influenced by the economic policies of each country, but also the currency fluctuations in the global markets are also influential on the value of money and, consequently, on their foreign trade. The paper examines the role of monetary policy and exchange rate impacts on net exports. The sample included in the study includes Asian developing economies selected based on the per capita income index of less than $ 20,000 per year (based on 2016 rankings). The present research interval was from 2000 to 2017.Based on the results of the variables stationary test for developed countries by the levin- lin- chu test - all variables are stationary. The results of the estimation of GMM PANEL model show that net exports with interruptions have a positive and significant effect on the current period. The results of the model have shown that net exports with interruptions have a positive and significant effect on the current period. The reason for this can be seen in the dynamics of international trade, which is transmitted to the next period. The effect of a variable amount of liquidity that reflects monetary policy has a positive and positive effect on net exports, meaning that the implementation of expansionary monetary policy in a selected country in developing countries has led to a net improvement in exports to this group of countries.

Keywords:

Monetary policy , exchange rate , inflation , gross domestic product , net exports