Export Sensitivity to Exchange Rate Variations in Mongolia: Insights from Time Series Econometrics

This study investigates the relationship between exchange rates and exports in Mongolia from 1995:1 -2017:06 using time series analysis. The ADF unit root test indicates both series are non-stationary in levels but stationary after differencing. The Johansen cointegration test reveals a significant long-term equilibrium relationship, with a positive cointegration coefficient suggesting a long-term positive correlation between exports and exchange rates. The VECM analysis highlights that while exports adjust quickly to deviations from equilibrium, exchange rates do not. Policymakers should focus on stabilizing exchange rates and diversifying exports, supported by robust monitoring and forecasting systems to manage economic fluctuations effectively.