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Impact of exchange rate volatility on the commodity trade between Pakistan and the US

Author

Listed:
  • Mohsen Bahmani-Oskooee

    (The University of Wisconsin-Milwaukee)

  • Javed Iqbal

    (Quaid-i-Azam University)

  • Saqib Ullah Khan

    (Quaid-i-Azam University)

Abstract

The impact of exchange rate volatility on the trade flows has been intensively studied by researchers after the adoption of flexible exchange rate system. Different studies have used data from different countries at different aggregation level. In this paper we consider the experiences of 57 Pakistan’s exporting to and 52 importing industries from the US over the period 1980–2014. We find that almost 50 % of the industries are affected by exchange rate volatility in the short-run. However, short-run effects last into the long run only in 26 exporting industries and 18 importing industries. Due to such disaggregation we find that all four large exporting and importing industries are affected positively in the long run. The list includes industries coded 656 (made up articles with 32.45 % of exports share), 841 (clothing with 50.7 % exports share), 263 (cotton with 8.64 % import share) and 282 (iron and steel scrap with 2.10 % imports share).

Suggested Citation

  • Mohsen Bahmani-Oskooee & Javed Iqbal & Saqib Ullah Khan, 2017. "Impact of exchange rate volatility on the commodity trade between Pakistan and the US," Economic Change and Restructuring, Springer, vol. 50(2), pages 161-187, May.
    • Handle: RePEc:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9187-9
    DOI: 10.1007/s10644-016-9187-9
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    References listed on IDEAS

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    Cited by:

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    2. Andrew Phiri, 2020. "Structural changes in exchange rate-stock returns dynamics in South Africa: examining the role of crisis and new trading platform," Economic Change and Restructuring, Springer, vol. 53(1), pages 171-193, February.
    3. Lee, Chien-Hui & Li, Shu-Hui & Lee, Jen-Yu, 2022. "An asymmetric impact analysis of the exchange rate volatility on commodity trade between the U.S. and China," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 399-415.
    4. Ayesha Liaqat & Mian Sajid Nazir & Iftikhar Ahmad & Hammad Hassan Mirza & Farooq Anwar, 2020. "Do stock price bubbles correlate between China and Pakistan? An inquiry of pre‐ and post‐Chinese investment in Pakistani capital market under China‐Pakistan Economic Corridor regime," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 323-335, July.
    5. Mohsen Bahmani-Oskooee & Augustine C. Arize, 2020. "Asymmetric response of domestic production to exchange rate changes: evidence from Africa," Economic Change and Restructuring, Springer, vol. 53(1), pages 1-24, February.
    6. Salahuddin & Javed Iqbal & Misbah Nosheen, 2020. "Economic & Cultural Distance & Regional Integration: Evidence from Gravity Model Using Disaggregated Data for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(2), pages 243-274.
    7. Bisharat Hussain Chang & Suresh Kumar Oad Rajput & Niaz Ahmed Bhutto, 2019. "Impact of Exchange Rate Volatility on the US Exports: A New Evidence From Multiple Threshold Nonlinear ARDL Model," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-26, June.
    8. Ayesha Liaqat & Mian Sajid Nazir & Iftikhar Ahmad, 2019. "Identification of multiple stock bubbles in an emerging market: application of GSADF approach," Economic Change and Restructuring, Springer, vol. 52(3), pages 301-326, August.
    9. Obumneke Bob Muoneke & Kingsley Ikechukwu Okere & Favour Chidinma Onuoha, 2023. "Extreme exchange rate dynamics and export trade in the selected oil-exporting countries in Africa. Multiple asymmetric threshold non-linear ARDL approach," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 32(6), pages 854-877, August.
    10. Mohsen Bahmani-Oskooee & Ridha Nouira, 2020. "On the impact of exchange rate volatility on Tunisia’s trade with 16 partners: an asymmetry analysis," Economic Change and Restructuring, Springer, vol. 53(3), pages 357-378, August.

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    More about this item

    Keywords

    Exchange rate uncertainty; Industry data; Bounds testing; Pakistan; The United States;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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