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 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
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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,"
Southern Economic Journal,
Southern Economic Association, vol. 79(4), pages 905-927, April.
- Demir, Firat & Caglayan, Mustafa & Dahi, Omar S., 2012. "Trade flows, exchange rate uncertainty and financial depth: evidence from 28 emerging countries," MPRA Paper 37400, University Library of Munich, Germany.
- Mustafa Caglayan & Omar S. Dahi & Firat Demir, 2010. "Trade Flows, Exchange Rate Uncertainty and Financial Depth: Evidence from 28 Emerging Countries," Working Papers 2010011, The University of Sheffield, Department of Economics, revised May 2010.
- Maryline Huchet-Bourdon & J. Korinek, 2011.
"To what extent do exchange rates and their volatility affect trade ?,"
- Marilyne Huchet-Bourdon & Jane Korinek, 2011. "To What Extent Do Exchange Rates and their Volatility Affect Trade?," OECD Trade Policy Papers 119, OECD Publishing.
- Verheyen, Florian, 2011. "Bilateral exports from Euro Zone countries to the US: Does exchange rate variability play a role?," Center for European, Governance and Economic Development Research Discussion Papers 121, University of Goettingen, Department of Economics.
- Marc Auboin & Michele Ruta, 2012.
"The Relationship between Exchange Rates and International Trade: A Literature Review,"
CESifo Working Paper Series
3868, CESifo Group Munich.
- Auboin, Marc & Ruta, Michele, 2013. "The relationship between exchange rates and international trade: a literature review," World Trade Review, Cambridge University Press, vol. 12(03), pages 577-605, July.
- Christopher F. Baum & Mustafa Caglayan, 2008. "The Volatility of International Trade Flows and Exchange Rate Uncertainty," Boston College Working Papers in Economics 695, Boston College Department of Economics.
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