Abdalrahman AbuDalu, Elsadig Musa Ahmed, Suleiman Warred Almasaied and Abuelgasim Ismail Elgazoli
This is an empirical analysis study focuses simultaneously on the impact of the real effective exchange rate, domestic interest rate, foreign interest rate, inflation rate, domestic money supply, net foreign assets and terms of trade which were identified by earlier researchers upon real growth domestic products (RGDP) of the ASEAN-5 countries. The real effective exchange rates (REER) of these currencies are measured against the US Dollar based on authoritative quarterly data time series between 1991:Q1 to 2006:Q2. This study is expected to provide several important economic and financial contributions to fill the gap in the financial and economic literature for ASEAN countries. It identifies the measure of the impact of the real effective exchange rates (REER) upon their economic growth using the most advanced statistical frameworks. A recently developed “Autoregressive Distributed Lag (ARDL)” co-integration by Pesaran et al. was the fundamental approach employed to analyse the relevant hypotheses of this study. The ARDL technique indeed was recognized to have additional advantages of yielding consistent estimates of the long-run coefficient. The empirical results confirm that the domestic money supply (M1) followed by REER (S) are the long-term and short- run variables that had positive and significant impact on ASEAN-5 countries’ real domestic products’ growth rate (RGDP). The other identified variables by the earlier researchers had diverse impacts during the full study period, their impact on economic growth of the study countries over the period vary in accordance to the contemporary businesses and economics environments.
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