Does Real Exchange Rate Volatility Affect Sectoral Trade Flows?
AbstractThis article investigates empirically the effect of real exchange rate volatility on sectoral bilateral trade flows between the United States and its top 13 trading partners. Our investigation also considers those effects on trade flows that may arise through changes in income volatility and the interaction between income and exchange rate volatilities. We provide evidence that (i) exchange rate volatility does not systematically affect sectoral trade flows, (ii) income volatility has little impact on trade flows, and (iii) the effect of the interaction term on trade flows is opposite that of exchange rate volatility, dampening its impact on trade flows.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 77 (2010)
Issue (Month): 2 (October)
Other versions of this item:
- Mustafa Caglayan & Jing Di, 2008. "Does Real Exchange Rate Volatility Affect Sectoral Trade Flows?," Working Papers, The University of Sheffield, Department of Economics 2008011, The University of Sheffield, Department of Economics, revised Sep 2008.
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- F31 - International Economics - - International Finance - - - Foreign Exchange
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
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- Mustafa Caglayan & Omar S. Dahi & Firat Demir, 2013.
"EsTrade Flows, Exchange Rate Uncertainty, and Financial Depth: Evidence from 28 Emerging Countries,"
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- Mustafa Caglayan & Omar S. Dahi & Firat Demir, 2010. "Trade Flows, Exchange Rate Uncertainty and Financial Depth: Evidence from 28 Emerging Countries," Working Papers, The University of Sheffield, Department of Economics 2010011, The University of Sheffield, Department of Economics, revised May 2010.
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- Maryline Huchet-Bourdon & J. Korinek, 2011. "To what extent do exchange rates and their volatility affect trade ?," Post-Print, HAL hal-00729403, HAL.
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