Foreign Exchange Rate and Economic Growth: The Case of Hong Kong

  • John Woods Department of Economics, University of Illinois at Chicago, IL, United States.
  • Brian Hausler SunTrust Bank, Atlanta, GA, United States.
  • Sara Dunning Department of Economics, Florida State University, Tallahassee, FL, United States.
  • Jie Yan School of Economics, Fudan University, Shanghai, China.
  • Hengfu Zhang School of Economics, Hunan University, Changsha, Hunan, China.
  • Youngwoo Kim Research Department, Bank of Korea, Seoul, South Korea.
  • Derrick Beck Department of Economics, University of Tennessee, Knoxville, TN, United States.
  • Gena Jamison Model Risk Group, First Horizon National Corporation, Memphis, TN, United States
  • John Zoboli Department of Economics, Cleveland State University, Cleveland, OH, United States.
  • Jay Waite Department of Economics, University of Huston, Huston, TX, United States.
  • Mark Donohue Department of Economics, University of Miami, Coral Gables, FL.
  • Kevin Carter Department of Economics, University of California, Los Angeles, CA, United States.
Keywords: Hong Kong Dollar Exchange Rate, Economic Growth, Structural VAR Model.

Abstract

The relationship between the exchange rate and the real GDP of Hong Kong in the long period from 1955 to 2015 is investigated using a structural VAR model. The mutual effect of the two variables is studied in three periods: The results indicate that there is no obvious relationship between the exchange rate and real GDP before Hong Kong’s economy booming. However, a significant positive correlation is found in the sample of 1975–1998, which is associated with the output increases. The direction between the exchange rate and real GDP becomes negative after 1998. In addition, based on Granger causality test, we found the exchange rate could Granger causes GDP after 1975, but there is no Granger causality connection between the two variables before 1975.

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Published
2017-08-06
How to Cite
Woods, J., Hausler, B., Dunning, S., Yan, J., Zhang, H., Kim, Y., Beck, D., Jamison, G., Zoboli, J., Waite, J., Donohue, M., & Carter, K. (2017). Foreign Exchange Rate and Economic Growth: The Case of Hong Kong. Journal of Research in Business, Economics and Management, 9(1), 1636-1640. Retrieved from http://www.scitecresearch.com/journals/index.php/jrbem/article/view/1202
Issue
Vol 9 No 1: JRBEM
Section
Articles

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