The Effects of the Real Exchange Rate Volatility and Misalignments on Foreign Trade Flows in Uzbekistan
AbstractThis study documents a quantitative analysis of exchange rate volatilities and misalignment in Uzbekistan for the period of 1994q3–2005q2. The results suggest thatthe real exchange rate volatility and misalignment have depressing effects on the volume of trade, mainly exports in Uzbekistan. The Governments currency rationing policy was lessening the volatility proving that the policy-induced changes in exchange rate has a stabilizing effect on trade flows. The implied elasticity for the most significant real exchange rate volatility coefficient is -0.20. Using a two-step Engle-Granger technique import demand and export supply price elasticities are computed. The results are consistent with the predictions from a number of previous studies, and in particular, the estimated exports price elasticity for Uzbek economy ranges from 1.65 to 1.84, while import demand price elasticity is between -0.78 and -0.83. At the same time, relatively lower elasticity during ’the currency rationing’ period indicate that large devaluations, most likely, did not generate the expected improvements in the overall export performance.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9749.
Date of creation: Mar 2008
Date of revision:
real exchange rate; volatility; misalignment; trade flows; Uzbekistan;
Other versions of this item:
- Olimov, Ulugbek & Sirajiddinov, Nishanbay, 2008. "The Effects of the Real Exchange Rate Volatility and Misalignments on Foreign Trade Flows in Uzbekistan," Economics Discussion Papers 2008-29, Kiel Institute for the World Economy.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- F31 - International Economics - - International Finance - - - Foreign Exchange
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