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Exchange Rate Volatility and Trade among the Asia Pacific Countries Econometric Analysis

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Abstract

The purpose of this paper is to investigate the impact of exchange rate volatility on exports among 14 Asia Pacific countries, where various measures to raise the intra-region trade are being implemented. The empirical tests, using annual data for the period from 1980 to 2002, detect a significant negative impact of exchange rate volatility on the volume of exports. In addition, various tests using the data for sub-sample periods indicate that the negative impact had been weakened since 1989, when APEC had launched, and surged again from 1997, when the Asian financial crisis broke out. Also, the test results show that the GDP of the importing country, the depreciation of the exporting country's currency value, the use of the same language and the membership of APEC have positive impacts on exports, while the distance between trading countries have negative impacts.

Suggested Citation

  • SaangJoon Baak, 2004. "Exchange Rate Volatility and Trade among the Asia Pacific Countries Econometric Analysis," Working Papers EMS_2004_02, Research Institute, International University of Japan.
    • Handle: RePEc:iuj:wpaper:ems_2004_02
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    File URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2004_02.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Nabi, Amina Ghulam & Khan, Usman Ullah, 2015. "Exchange Rate Volatility and Import Demand Function: A Comparative Analysis of Selected SAARC Countries," MPRA Paper 105066, University Library of Munich, Germany.
    3. Estrella Gómez & Juliette Milgram Baleix, 2012. "EMU impact of on third countries’ exports. A gravity approach," ThE Papers 10/26, Department of Economic Theory and Economic History of the University of Granada..
    4. Billen, Dieter & Garcia, Maria Melody & Khasanova, Nelli, 2005. "Is the effect of exchange rate volatility on trade more pronounced in Latin America than in Asia?," Kiel Advanced Studies Working Papers 434, Kiel Institute for the World Economy (IfW Kiel).
    5. Pabai Fofanah, 2020. "Effects of Exchange Rate Volatility on Trade: Evidence from West Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 12(3), pages 32-52.
    6. Simbarashe Mhaka & Leward Jeke, 2018. "A comparative analysis of the determinants of South African bilateral trade flows with the European Union-Southern African Development Community economic partnership agreement and trade development an," Working Papers 1836, Department of Economics, Nelson Mandela University, revised Dec 2018.
    7. Balázs Égert & Amalia Morales‐Zumaquero, 2008. "Exchange Rate Regimes, Foreign Exchange Volatility, and Export Performance in Central and Eastern Europe: Just another Blur Project?," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 577-593, August.
    8. Shaista Alam & Qazi Masood Ahmed & Muhammad Shahbaz, 2017. "Exchange Rate Volatility and Pakistan’s Exports to Major Markets: A Sectoral Analysis," Global Business Review, International Management Institute, vol. 18(6), pages 1507-1519, December.
    9. Abel Mwanyungwe, 2017. "Exchange Rate Volatility and Malawi¡¯s Tobacco Exports to The United Kingdom and The United States," Applied Economics and Finance, Redfame publishing, vol. 4(1), pages 149-168, January.
    10. Osei-Assibey, Kwame, 2016. "Revisiting the Diverse Empirical Findings on the Impact of Exchange Rate Volatility on Trade: Some Comparable Evidences from Ghana and Two other Developing Economies," MPRA Paper 94368, University Library of Munich, Germany.
    11. Matthieu Bussière & Jarko Fidrmuc & Bernd Schnatz, 2008. "EU Enlargement and Trade Integration: Lessons from a Gravity Model," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 562-576, August.
    12. Chandan Sharma & Debdatta Pal, 2019. "Does Exchange Rate Volatility Dampen Imports? Commodity-Level Evidence From India," International Economic Journal, Taylor & Francis Journals, vol. 33(4), pages 696-718, October.
    13. Kim, Sokchea, 2006. "An Analysis of Cambodia’s Trade Flows: A Gravity Model," MPRA Paper 21461, University Library of Munich, Germany.
    14. Balázs Égert & Amalia Morales‐Zumaquero, 2008. "Exchange Rate Regimes, Foreign Exchange Volatility, and Export Performance in Central and Eastern Europe: Just another Blur Project?," Review of Development Economics, Wiley Blackwell, vol. 12(3), pages 577-593, August.
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    More about this item

    Keywords

    Exchange rate volatility; Export; Asia Pacific region; APEC; Gravity model;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance

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