The Effect of Exchange Rate Volatility on International Trade in East Asia
AbstractIn this paper, we empirically investigate the relationship between exchange rate volatility and international trade, focusing on East Asia. Our findings are summarized as follows: first, intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions. Second, one important source for the discouragement is that intermediate goods trade in international production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of East Asian trade. Third, the negative effect of the volatility is greater than that of tariffs and smaller than that of distance-related costs in East Asia.
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Bibliographic InfoPaper provided by Economic Research Institute for ASEAN and East Asia (ERIA) in its series Working Papers with number d003.
Date of creation: 12 Dec 2008
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Exchange rate volatility; Trade; East Asia;
Other versions of this item:
- Hayakawa, Kazunobu & Kimura, Fukunari, 2009. "The effect of exchange rate volatility on international trade in East Asia," Journal of the Japanese and International Economies, Elsevier, vol. 23(4), pages 395-406, December.
- F10 - International Economics - - Trade - - - General
- F31 - International Economics - - International Finance - - - Foreign Exchange
- N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East
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