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Exchange Rate Uncertainty and Import Demand of Thailand

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  • Jiranyakul, Komain

Abstract

This study investigates the impact of real exchange rate uncertainty on import demand of Thailand. The period of study is during July 1997 to December 2011. The results from bounds testing for cointegration show that all variables are cointegrated. Even though there is no short-run impact, but the long-run negative impact of real exchange rate uncertainty on real imports is large and highly significant under the floating exchange rate regime. In the long run, a rise in real exchange rate uncertainty can improve the country’s trade balance by substantially lowering import demand, but can harm industrial production at the same time. Therefore, stabilization of real effective exchange rate via major nominal exchange rates may deem necessary.

Suggested Citation

  • Jiranyakul, Komain, 2013. "Exchange Rate Uncertainty and Import Demand of Thailand," MPRA Paper 45216, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:45216
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    Cited by:

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    2. Ubong Edem Effiong, 2022. "Foreign Exchange Reserves and Import Demand in a Developing Economy: New Evidence from Nigeria," International Journal of Business Management and Finance Research, Academia Publishing Group, vol. 5(2), pages 85-99.
    3. Forgenie, David & Khoiriyah, Nikmatul, 2023. "Analyzing Food Import Demand in Indonesia: An ARDL Bounds Testing Approach," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 11(1), January.

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    More about this item

    Keywords

    Exchange rate uncertainty; GARCH; imports; ARDL bounds testing;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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