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Exchange Rate Volatility and Exports: New Empirical Evidence from the Emerging East Asian Economies

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Author Info
Chit, Myint Moe
Rizov, Marian
Willenbockel, Dirk

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Abstract

This paper examines the impact of bilateral real exchange rate volatility on real exports of five emerging East Asian countries among themselves as well as to thirteen industrialised countries. We explicitly recognize the specificity of the exports between the emerging East Asian and industrialised countries and employ a generalized gravity model that combines a traditional long-run export demand model with gravity type variables. In the empirical analysis we use a panel comprising 25 years of quarterly data and perform unit-root and cointegration tests to verify the long-run relationship among the regression variables. The results provide strong evidence that exchange rate volatility has a negative impact on the exports of emerging East Asian countries. These results are robust across different estimation techniques and do not depend on the variable chosen to proxy exchange rate uncertainty.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9014.

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Date of creation: Mar 2008
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Handle: RePEc:pra:mprapa:9014

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Keywords: Trade uncertainty exchange rate fluctuations East Asia

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Find related papers by JEL classification:
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F31 - International Economics - - International Finance - - - Foreign Exchange

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