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The Implication of the Oscillations in Exchange Rate for the Commodity-wise Trade Flows between Pakistan and China: An Evidence from ARDL Approach

Author

Listed:
  • Muhammad Zubair Chishti

    (School of Busniess, Zhengzhou University, Henan, China)

  • Javed Iqbal

    (School of Economics, Quaid-i-Azam University, Islamabad 45320, Pakistan)

  • Farrukh Mahmood

    (Pakistan Institute of Development Economics (PIDE), P.O. Box 1091, Islamabad 44000, Pakistan)

  • Hafiz Syed Muhammad Azeem

    (Finance Division, Government of Pakistan, Pak Secretariat, Islamabad, Islamabad Capital Territory 44000, Pakistan)

Abstract

This study intends to explore the impact of oscillations in the exchange rate on commodity-wise trade flows between Pakistan and its major trading partner China, while employing the annual data for 1982–2017. Applying the ARDL bounds testing approach, this study confirms that 94% of the selected exporting and 86% of the chosen importing industries possess “cointegration”. Further, the findings reveal that 81%, in the short run, and 52%, in the long run, of exporting industries respond to the volatile exchange rate. Moreover, the volatility affects 77%, in the short run, while 65%, in the long term, of the importing industries. Fascinatingly, the findings also indicate that a major shareholder exporting industry coded as 651 (“Textile yarn and thread” with 57% share) gets benefitted from the volatile exchange rate.

Suggested Citation

  • Muhammad Zubair Chishti & Javed Iqbal & Farrukh Mahmood & Hafiz Syed Muhammad Azeem, 2020. "The Implication of the Oscillations in Exchange Rate for the Commodity-wise Trade Flows between Pakistan and China: An Evidence from ARDL Approach," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 23(04), pages 1-33, December.
    • Handle: RePEc:wsi:rpbfmp:v:23:y:2020:i:04:n:s0219091520500307
    DOI: 10.1142/S0219091520500307
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    Cited by:

    1. Chishti, Muhammad Zubair & Khalid, Ali Awais & Sana, Moniba, 2023. "Conflict vs sustainability of global energy, agricultural and metal markets: A lesson from Ukraine-Russia war," Resources Policy, Elsevier, vol. 84(C).

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