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The effects of exchange rate variability on Malaysia's disaggregated electrical exports

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Author Info

  • Koi Nyen Wong
  • Tuck Cheong Tang

Abstract

Purpose – This paper aims to examine the influence of exchange rate variability on the demand for Malaysia's top five electrical exports as classified by Standard International Trade Classification (SITC) product groups. Design/methodology/approach – The autoregressive distributed lag (ARDL) modelling approach to co-integration is employed in order to estimate the influence of exchange rate variability on export demand. Findings – The empirical results indicate that foreign income and prices are important determinants of export demand for all of the five electrical exports, in both the long run and the short run, over the sample period 1990-2001. More interestingly, this paper supports the view that exchange rate variability has an adverse effect on Malaysia's electrical exports. Research limitations/implications – One limitation of the study is the appropriateness of the ARDL modelling approach to examine the influence of exchange rate variability (which is stationary, I(0)) on trade behaviour such as export demand behaviour. Practical implications – This paper is important to policymakers for the design of both exchange rate and trade policies in order to promote export growth, which could lead to Malaysia's transition towards high-technology industrialisation. Originality/value – This paper examines the influence of exchange rate variability on the demand for Malaysia's top five electrical exports as classified by SITC product groups, information which is not available in the existing literature.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal Journal of Economic Studies.

Volume (Year): 35 (2008)
Issue (Month): 2 (May)
Pages: 154-169

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Handle: RePEc:eme:jespps:v:35:y:2008:i:2:p:154-169

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Related research

Keywords: Electrical goods; Exchange rates; Exports; Malaysia;

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Citations

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Cited by:
  1. Bahmani-Oskooee, Mohsen & Harvey, Hanafiah & Hegerty, Scott, 2013. "Currency depreciations and the U.S.–Italian trade balance: Industry-level estimates," Research in Economics, Elsevier, vol. 67(3), pages 215-225.
  2. Bahmani-Oskooee, Mohsen & Xi, Dan, 2012. "Exchange rate volatility and domestic consumption: Evidence from Japan," Economic Systems, Elsevier, vol. 36(2), pages 326-335.
  3. Mohsen Bahmani-Oskooee & Sahar Bahmani, 2014. "Monetary Uncertainty and Demand for Money in Korea," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(3), pages 317-324, March.
  4. Bahmani-Oskooee, Mohsen & Bolhassani, Marzieh & Hegerty, Scott W., 2011. "Industry trade between Canada and Mexico: Will a weakening peso help Mexican manufacturing in the long run?," The North American Journal of Economics and Finance, Elsevier, vol. 22(2), pages 89-101, August.
  5. Bahmani-Oskooee, Mohsen & Satawatananon, Kaveepot, 2010. "US-Thailand trade at the commodity level and the role of the real exchange rate," Journal of Asian Economics, Elsevier, vol. 21(6), pages 514-525, December.
  6. Bahmani-Oskooee, Mohsen & Harvey, Hanafiah, 2011. "Exchange-rate volatility and industry trade between the U.S. and Malaysia," Research in International Business and Finance, Elsevier, vol. 25(2), pages 127-155, June.
  7. Bahmani-Oskooee, Mohsen & Harvey, Hanafiah & Hegerty, Scott W., 2014. "Industry trade and exchange-rate fluctuations: Evidence from the U.S. and Chile," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 619-626.
  8. Mohsen Bahmani-oskooee & Massoumeh Hajilee, 2011. "How Fast Wages Adjust to Prices: A Multi Country Analysis," Economics Bulletin, AccessEcon, vol. 31(3), pages 2404-2413.
  9. Mohsen Bahmani-Oskooee & Hanafiah Harvey & Scott W. Hegerty, 2012. "Exchange-Rate Volatility And Industry Trade Between The U.S. And Korea," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(1), pages 1-27, March.

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