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Does The Service Trade Openness Mitigate Real Exchange Rate Volatility?

Author

Listed:
  • Febrio Kacaribu

    (University of Indonesia)

  • Syahda Sabrina

    (University of Indonesia)

  • Teuku Riefky

    (University of Indonesia)

Abstract

This study examines the relationship between trade openness and exchange rate volatility. We use panel data of 52 countries and document trade openness has a negative and statistically significant effect on exchange rate volatility. The second explanatory variable considered in the model is money supply shock which is found to have a positive and statistically significant effect on exchange rate volatility. Our results survive battery of robustness checks.

Suggested Citation

  • Febrio Kacaribu & Syahda Sabrina & Teuku Riefky, 2021. "Does The Service Trade Openness Mitigate Real Exchange Rate Volatility?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 24(2), pages 237-254, June.
    • Handle: RePEc:idn:journl:v:24:y:2021:i:2e:p:237-254
    DOI: https://doi.org/10.21098/bemp.v24i2.1168
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    More about this item

    Keywords

    Real exchange rate; Trade openness; Money supply shock; Panel data;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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