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Export growth slowdown and currency crisis: the Malaysian experience

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  • Anita Daraisami
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    Abstract

    A slowdown in export growth occurred in all East Asian economies that were affected by the Asian currency crisis. Misaligned exchange rates have been widely cited as a cause of the slowdown. In the Malaysian context at least a vulnerability to the downturn in the electronic cycle could also be a major factor leading to poor export performance. Using the US/yen dollar rate as a proxy for exchange rate misalignment and US total new orders for electronics as a proxy for global electronics demand, cointegration analysis was used to establish the likely causes of a slowdown in Malaysia's export performance. Empirical results suggest that a unique long-run relationship exists between all three variables. The policy implications of these results including exchange rate monitoring and export diversification are discussed in the conclusion.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Applied Economics.

    Volume (Year): 36 (2004)
    Issue (Month): 17 ()
    Pages: 1947-1957

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    Handle: RePEc:taf:applec:v:36:y:2004:i:17:p:1947-1957

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
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    3. Fernald, John & Edison, Hali & Loungani, Prakash, 1999. "Was China the first domino? Assessing links between China and other Asian economies," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 515-535, August.
    4. Meese, Richard A & Singleton, Kenneth J, 1982. " On Unit Roots and the Empirical Modeling of Exchange Rates," Journal of Finance, American Finance Association, vol. 37(4), pages 1029-35, September.
    5. Corsetti, Giancarlo & Pesenti, Paolo & Roubini, Nouriel, 1999. "What caused the Asian currency and financial crisis?," Japan and the World Economy, Elsevier, vol. 11(3), pages 305-373, October.
    6. Li-Gang Liu & Marcus Noland & Sherman Robinson & Zhi Wang, 1998. "Asian Competitive Devaluations," Working Paper Series wp98-2, Peterson Institute for International Economics.
    7. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
    8. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
    9. James G. MacKinnon, 2010. "Critical Values for Cointegration Tests," Working Papers 1227, Queen's University, Department of Economics.
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    Cited by:
    1. Koi Nyen Wong & Tuck Cheong Tang, 2009. "Exchange rate variability and the export demand for Malaysia's semiconductors: an empirical study," Applied Economics, Taylor & Francis Journals, vol. 43(6), pages 695-706.
    2. Byron Gangnes & Ari Van Assche, 2010. "Global Production Networks in Electronics and Intra-Asian Trade," LICOS Discussion Papers 25710, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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