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The Asymmetric Impact of Exchange Rate Changes on Bilateral Trade between Vietnam and the US: Does the COVID-19 Pandemic Matter?

Author

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  • Thi, Ha Tran

    (Faculty of Mathematical Economics, National Economic University, Hanoi, Vietnam)

  • Nguyen, Quang Dong

    (Faculty of Mathematical Economics, National Economic University, Hanoi, Vietnam)

  • Le, Anh Duc

    (Faculty of Mathematical Economics, National Economic University, Hanoi, Vietnam)

Abstract

This study examines the relationship between the exchange rate and the Vietnam-US trade balance by employing a combination of Autoregressive Distributed Lag (ARDL) and non-linear Autoregressive Distributed Lag (NARDL) approaches with disaggregated data from 21 industries from 2008 to 2022. The findings reveal that, in both ARDL and NARDL models, a real Vietnamese Dong (VND) depreciation does not significantly impact on the aggregated trade balance in the long-run. The results provide evidence of an asymmetric impact of the real exchange rate on the trade balance. These findings also suggest that the COVID-19 pandemic may have induced structural breaks in the relationship between exchange rates and trade balances, leading to increased sensitivity of trade balances to exchange rate movements.

Suggested Citation

  • Thi, Ha Tran & Nguyen, Quang Dong & Le, Anh Duc, 2024. "The Asymmetric Impact of Exchange Rate Changes on Bilateral Trade between Vietnam and the US: Does the COVID-19 Pandemic Matter?," International Journal of Economics and Financial Issues, Econjournals, vol. 15(1), pages 386-396, December.
    • Handle: RePEc:eco:journ1:v:15:y:2024:i:1:id:17607
    DOI: 10.32479/ijefi.17607
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