The Effect of Real Effective Exchange Rate on Balance of Payments in Thailand

Abstract

Purpose: This study tends to examine the impact of Real Effective Exchange Rate (REER) on the balance of payment of Thailand through studying the concept of the real effective exchange rate and balance of payment within the economy of Thailand.
Design: The study has adopted the quantitative approach where the data was gathered through the websites for the last 59 years i.e. from 1960 to 2018, therefore, the source of data collection was secondary. The study has adopted the VECM model, JJ cointegration and Granger Causality for the purpose of analysing the time series data.
Findings: The findings of this research suggests that there is a significant impact of the real effective exchange rate, inflation and GDP on the balance of payment of Thailand in both long term and short term.
Limitation: The study is limited to the economy of Thailand. Additionally, the number of variables used were limited in the study.