The Effect of Exchange Rate Volatility on International Trade: The Implication for Production Networks in East Asia
AbstractThis paper is an empirical investigation of the relationship between exchange rate volatility and international trade, focusing on East Asia. It finds that intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions because intermediate goods trade in production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of trade. In addition, this negative effect of volatility is mainly induced by the unanticipated volatility and has an even greater impact than that of tariffs.
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Bibliographic InfoPaper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 156.
Date of creation: May 2008
Date of revision:
Publication status: Published in IDE Discussion Paper. No. 156. 2008.5
Postal: Publication Office, IDE 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545 JAPAN
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-21 (All new papers)
- NEP-CBA-2008-06-21 (Central Banking)
- NEP-FMK-2008-06-21 (Financial Markets)
- NEP-INT-2008-06-21 (International Trade)
- NEP-OPM-2008-06-21 (Open Economy Macroeconomics)
- NEP-SEA-2008-06-21 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"The Formation of International Production and Distribution Networks in East Asia,"
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National Bureau of Economic Research, Inc.
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CEPR Discussion Papers
3381, C.E.P.R. Discussion Papers.
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- ITO Takatoshi & KOIBUCHI Satoshi & SASAKI Yuri & SATO Kiyotaka & SHIMIZU Junko & HAYAKAWA Kazunobu & YOSHIMI Taiyo, 2008. "Currency Invoicing and Foreign Exchange Risk Management: A Case Study of Japanese Firms (Japanese)," Discussion Papers (Japanese) 08009, Research Institute of Economy, Trade and Industry (RIETI).
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