Advanced Search
MyIDEAS: Login to save this paper or follow this series

An Empirical Analysis of Short-Run and Long-Run Irish Export Functions: Does Exchange Rate Volatility Matter?

Contents:

Author Info

  • Donal Bredin
  • Stilianos Fountas

    (Department of Economics, National University of Ireland, Galway)

  • Eithne Murphy

    ()
    (Department of Economics, National University of Ireland, Galway)

Abstract

We analyse the long-run and short-run relationship between merchandise export volume and its determinants, foreign income, relative prices and exchange rate variability, using the techniques of cointegration and error correction. The model was estimated for Irish exports and sectoral exports SITC 0--4 and SITC 5--8 to the European Union using quarterly data for the period 1979--1992. The sectoral classification corresponds to the exports of mainly indigenous Irish firms and multinationals, respectively. We find that exchange rate volatility has a negative effect on the exports of the multinational sector but no effect on the exports of the indigenous sector in the short run. In contrast, exchange rate volatility has no effect on the exports of the multinational sector but a positive effect on the exports of the indigenous sector and overall exports in the long run. This last result implies that Ireland's participation in the single European currency might have a negative impact on exports of indigenous firms and, as a consequence, overall exports.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.economics.nuig.ie/resrch/paper.php?pid=26
Our checks indicate that this address may not be valid because: 404 Not Found (http://www.economics.nuig.ie/resrch/paper.php?pid=26 [301 Moved Permanently]--> http://www.nuigalway.ie/business-public-policy-law/cairnes/subjectareas/economics/resrch/paper.php?pid=26). If this is indeed the case, please notify (Srinivas Raghavendra)
File Function: First version, 1998
Download Restriction: no

File URL: http://www.economics.nuig.ie/resrch/paper.php?pid=26
Our checks indicate that this address may not be valid because: 404 Not Found (http://www.economics.nuig.ie/resrch/paper.php?pid=26 [301 Moved Permanently]--> http://www.nuigalway.ie/business-public-policy-law/cairnes/subjectareas/economics/resrch/paper.php?pid=26). If this is indeed the case, please notify (Srinivas Raghavendra)
File Function: Revised version, 1998
Download Restriction: no

Bibliographic Info

Paper provided by National University of Ireland Galway, Department of Economics in its series Working Papers with number 22.

as in new window
Length:
Date of creation: 1998
Date of revision: 1998
Publication status: Published in the International Review of Applied Economics
Handle: RePEc:nig:wpaper:0022

Contact details of provider:
Postal: St. Anthony's College, Newcastle Road, Galway
Phone: +353-91 524411 ext. 2501
Fax: +353-91 524130
Web page: http://economics.nuigalway.ie
More information through EDIRC

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Gonzalo, Jesus, 1994. "Five alternative methods of estimating long-run equilibrium relationships," Journal of Econometrics, Elsevier, Elsevier, vol. 60(1-2), pages 203-233.
  2. Holly, Sean, 1995. "Exchange Rate Uncertainty and Export Performance: Supply and Demand Effects," Scottish Journal of Political Economy, Scottish Economic Society, vol. 42(4), pages 381-91, November.
  3. McKenzie, Michael D, 1999. " The Impact of Exchange Rate Volatility on International Trade Flows," Journal of Economic Surveys, Wiley Blackwell, vol. 13(1), pages 71-106, February.
  4. De Grauwe, Paul, 1987. "International trade and economic growth in the european monetary system," European Economic Review, Elsevier, vol. 31(1-2), pages 389-398.
  5. Franke, Gunter, 1991. "Exchange rate volatility and international trading strategy," Journal of International Money and Finance, Elsevier, Elsevier, vol. 10(2), pages 292-307, June.
  6. Fountas, Stilianos & Aristotelous, Kyriacos, 1999. "Has the European Monetary System led to more exports? Evidence from four European Union countries," Economics Letters, Elsevier, vol. 62(3), pages 357-363, March.
  7. Pozo, Susan, 1992. "Conditional Exchange-Rate Volatility and the Volume of International Trade: Evidence from the Early 1900s," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 325-29, May.
  8. Joseph E. Gagnon, 1989. "Exchange rate variability and the level of international trade," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 369, Board of Governors of the Federal Reserve System (U.S.).
  9. Lastrapes, William D. & Koray, Faik, 1990. "Exchange rate volatility and U.S. multilateral trade flows," Journal of Macroeconomics, Elsevier, Elsevier, vol. 12(3), pages 341-362.
  10. Kenen, Peter B & Rodrik, Dani, 1986. "Measuring and Analyzing the Effects of Short-term Volatility in Real Exchange Rates," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 311-15, May.
  11. Peree, Eric & Steinherr, Alfred, 1989. "Exchange rate uncertainty and foreign trade," European Economic Review, Elsevier, vol. 33(6), pages 1241-1264, July.
  12. Hooper, Peter & Kohlhagen, Steven W., 1978. "The effect of exchange rate uncertainty on the prices and volume of international trade," Journal of International Economics, Elsevier, vol. 8(4), pages 483-511, November.
  13. Peter C.B. Phillips, 1988. "Optimal Inference in Cointegrated Systems," Cowles Foundation Discussion Papers 866R, Cowles Foundation for Research in Economics, Yale University, revised Aug 1989.
  14. Giovannini, Alberto, 1988. "Exchange rates and traded goods prices," Journal of International Economics, Elsevier, vol. 24(1-2), pages 45-68, February.
  15. Koray, Faik & Lastrapes, William D, 1989. "Real Exchange Rate Volatility and U.S. Bilateral Trade: A VAR Approach," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 708-12, November.
  16. Padma Gotur, 1985. "Effects of Exchange Rate Volatility on Trade: Some Further Evidence (Effets de l'instabilité des taux de change sur le commerce mondial: nouvelles constatations) (Efectos de la inestabilidad de los," IMF Staff Papers, Palgrave Macmillan, vol. 32(3), pages 475-512, September.
  17. Chowdhury, Abdur R, 1993. "Does Exchange Rate Volatility Depress Trade Flows? Evidence from Error-Correction Models," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 700-706, November.
  18. Paul De Grauwe, 1988. "Exchange Rate Variability and the Slowdown in Growth of International Trade," IMF Staff Papers, Palgrave Macmillan, vol. 35(1), pages 63-84, March.
  19. Thursby, Jerry G & Thursby, Marie C, 1987. "Bilateral Trade Flows, the Linder Hypothesis, and Exchange Risk," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 488-95, August.
  20. Baron, David P, 1976. "Fluctuating Exchange Rates and the Pricing of Exports," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 14(3), pages 425-38, September.
  21. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 231-254.
  22. Browne, Francis X, 1982. "Modelling Export Prices and Quantities in a Small Open Economy [The Supply and Demand for Exports: A Simultaneous Approach]," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 346-47, May.
  23. Edgar Morgenroth, 2000. "Exchange rates and trade: the case of Irish exports to Britain," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 32(1), pages 107-110.
  24. Peter B. Clark, 1973. "Uncertainty, Exchange Risk, And The Level Of International Trade," Economic Inquiry, Western Economic Association International, vol. 11(3), pages 302-313, 09.
  25. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 15(30), pages 7-46, 04.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Koi Nyen Wong & Tuck Cheong Tang, 2007. "Exchange Rate Variability And The Export Demand For Malaysia'S Semiconductors: An Empirical Study," Monash Economics Working Papers 13-07, Monash University, Department of Economics.
  2. P�l Boug & Andreas Fagereng, 2007. "Exchange rate volatility and export performance: A cointegrated VAR approach," Discussion Papers, Research Department of Statistics Norway 522, Research Department of Statistics Norway.
  3. O'Donnell, Nuala, 2005. "Re-Estimation of the Trade Block in the Banks Quarterly Econometric Model," Quarterly Bulletin Articles, Central Bank of Ireland, pages 97-117, July.
  4. Nishimura, Yusaku & Hirayama, Kenjiro, 2013. "Does exchange rate volatility deter Japan-China trade? Evidence from pre- and post-exchange rate reform in China," Japan and the World Economy, Elsevier, Elsevier, vol. 25, pages 90-101.
  5. Gilda Fernandez & Cem Karacadag & Rupa Duttagupta, 2004. "From Fixed to Float," IMF Working Papers 04/126, International Monetary Fund.
  6. F. V. Vieira & M. Holland & C. Gomes da Silva & L. C. Bottecchia, 2013. "Growth and exchange rate volatility: a panel data analysis," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 45(26), pages 3733-3741, September.
  7. Jorge Iván Canales Kriljenko & Cem Karacadag & Roberto Pereira Guimarães, 2003. "Official Intervention in the Foreign Exchange Market," IMF Working Papers 03/152, International Monetary Fund.
  8. Aderbal Oliveira Damasceno & Flávio Vilela Vieir, 2014. "Desalinhamento Cambial, Volatilidade Cambial E Crescimento Econômico: Uma Análise Para A Economia Brasileira (1995-2011)," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Gra 100, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  9. Arief Bustaman & Kankesu Jayanthakumaran, 2006. "The Impact of Exchange Rate Volatility on Indonesia’s Exports to the USA: An Application of ARDL Bounds Testing Procedure," Working Papers in Economics and Development Studies (WoPEDS) 200610, Department of Economics, Padjadjaran University, revised Dec 2006.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nig:wpaper:0022. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Srinivas Raghavendra).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.