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Real exchange rate volatility, terms-of-trade shocks, and financial integration in primary-commodity exporting economies

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  • Al-Abri, Almukhtar

Abstract

Using a panel of 53 primary-commodity exporting countries, we show that greater international financial integration reduces the impact of terms-of-trade shocks on real exchange rate volatility. This reduction is larger when we define financial integration as foreign direct investment.

Suggested Citation

  • Al-Abri, Almukhtar, 2013. "Real exchange rate volatility, terms-of-trade shocks, and financial integration in primary-commodity exporting economies," Economics Letters, Elsevier, vol. 120(1), pages 126-129.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:1:p:126-129
    DOI: 10.1016/j.econlet.2013.04.003
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    References listed on IDEAS

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    1. Cashin, Paul & Cespedes, Luis F. & Sahay, Ratna, 2004. "Commodity currencies and the real exchange rate," Journal of Development Economics, Elsevier, vol. 75(1), pages 239-268, October.
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    9. Hau, Harald, 2002. "Real Exchange Rate Volatility and Economic Openness: Theory and Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(3), pages 611-630, August.
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    11. Harrison, Ann E. & Love, Inessa & McMillan, Margaret S., 2004. "Global capital flows and financing constraints," Journal of Development Economics, Elsevier, vol. 75(1), pages 269-301, October.
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    Cited by:

    1. repec:spr:series:v:9:y:2018:i:1:d:10.1007_s13209-017-0168-7 is not listed on IDEAS
    2. repec:eee:ecofin:v:48:y:2019:i:c:p:202-220 is not listed on IDEAS
    3. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Emerging And Developing Countries? Considering Exchange Rate Volatility'S Effects," Working Papers hal-01968082, HAL.
    4. repec:bla:ausecp:v:58:y:2019:i:1:p:41-53 is not listed on IDEAS
    5. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Developing Countries? Considering Exchange Rate Volatility," Working Papers halshs-02175361, HAL.
    6. Saif Al-Abri, Almukhtar, 2014. "How does terms-of-trade behavior shape international financial integration in primary-commodity exporting economies?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 33(C), pages 335-353.
    7. repec:bla:econpa:v:38:y:2019:i:1:p:41-55 is not listed on IDEAS
    8. repec:bla:worlde:v:39:y:2016:i:12:p:1974-1999 is not listed on IDEAS

    More about this item

    Keywords

    Real exchange rate; International financial integration; Foreign direct investment; Foreign portfolio investment;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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