Do good institutions undermine the impact of exchange rate volatility on economic growth?

This paper analyzes the role of good institutions in undermining the effect of exchange rate fluctuations on economic growth. Utilizing the recent dynamic panel GMM estimation techniques for 38 middle and high incomes economies over the period 1999- 2013 , we found that the direct effect of exchange rate fluctuations measured by normal volatility (using the GARCH models) and extreme volatility (or crisis) on economic growth is negative and significant. When we considered the institutional variables in the model, we concluded that good institutions are able to mitigate the exchange rate fluctuations impact on economic growth.