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Exchange-rate risk and U.S.-Japan trade: Evidence from industry level data

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  • Bahmani-Oskooee, Mohsen
  • Hegerty, Scott W.

Abstract

Since the Bretton Woods system of fixed exchange rates broke down in 1973, the resulting increase in exchange-rate variability has introduced uncertainty into trading relationships worldwide. Has this increased volatility had an effect on Japanese-U.S. trade? To answer this question, we apply cointegration analysis to disaggregated export and import data for 117 Japanese industries from 1973 to 2006. We find that in the long run, the trade shares of most industries are relatively unaffected by increased uncertainty, while other industries experience a relative increase or decrease in their proportion of overall trade. In the short run, some industries are influenced by exchange-rate volatility, but this effect is often ambiguous. Japanese exports of certain manufactures seem to improve in the long run relative to overall trade flows. J. Japanese Int. Economies 22 (4) (2008) 518-534.

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  • Bahmani-Oskooee, Mohsen & Hegerty, Scott W., 2008. "Exchange-rate risk and U.S.-Japan trade: Evidence from industry level data," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 518-534, December.
  • Handle: RePEc:eee:jjieco:v:22:y:2008:i:4:p:518-534
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    Cited by:

    1. Mohsen Bahmani-Oskooee & Masoomeh Hajilee, 2013. "Impact of exchange-rate variability on commodity trade between U.S. and Germany," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(2), pages 287-324, May.
    2. Osama M. Badr & Ahmed F. El-khadrawi, 2018. "Exchange Rate Volatility and Trade: An Empirical Investigation from the Egyptian Economy," Applied Economics and Finance, Redfame publishing, vol. 5(4), pages 140-149, July.
    3. Bahmani-Oskooee, Mohsen & Hajilee, Massomeh, 2013. "Exchange rate volatility and its impact on domestic investment," Research in Economics, Elsevier, vol. 67(1), pages 1-12.
    4. Mohsen Bahmani-Oskooee & Hanafiah Harvey & Scott Hegerty, 2013. "Exchange-rate variability and U.S.-French trade flows: evidence from industry data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 40(4), pages 685-719, November.
    5. Mohsen Bahmani‐Oskooee & Huseyin Karamelikli, 2019. "Exchange rate volatility and Japan–U.S. commodity trade: An asymmetry analysis," The World Economy, Wiley Blackwell, vol. 42(11), pages 3287-3318, November.
    6. Manuel CANTAVELLA-JORDA & Sheila Amin GUTIERREZ DE PIÑERES, 2012. "A Cross-national Panel Study of Devaluations on Disaggregated Export Sectors: A Case for Sector Specific Policies," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(2).
    7. MORIKAWA Masayuki, 2016. "Uncertainty over Exchange Rates and Exports: Evidence from dispersion of expectations as a measure of uncertainty," Discussion papers 16010, Research Institute of Economy, Trade and Industry (RIETI).
    8. Mohsen Bahmani-Oskooee & Scott Hegerty & Amr Hosny, 2015. "Exchange-rate volatility and commodity trade between the E.U. and Egypt: evidence from 59 industries," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(1), pages 109-129, February.
    9. Anmar Pretorius & Heinrich Nel, 2018. "Disentangling the exchange rate risk, sectoral export flows and financial development nexus," Working Papers 733, Economic Research Southern Africa.
    10. Auboin, Marc & Ruta, Michel, 2011. "The relationship between exchange rates and International Trade: A review of economic literature," WTO Staff Working Papers ERSD-2011-17, World Trade Organization (WTO), Economic Research and Statistics Division.
    11. Nishimura, Yusaku & Hirayama, Kenjiro, 2013. "Does exchange rate volatility deter Japan-China trade? Evidence from pre- and post-exchange rate reform in China," Japan and the World Economy, Elsevier, vol. 25, pages 90-101.
    12. Salma Zahir & Muneeba Shahid & Qurat-ul-ain Altaf & Mehwish Nawaz, 2023. "Does Exchange Rate Volatility Affect Foreign Trade? The Empirical Evidence from Some Selected MENA Countries," Journal of Policy Research (JPR), Research Foundation for Humanity (RFH), vol. 9(2), pages 689-700.
    13. Mohsen Bahmani-Oskooee & Hanafiah Harvey, 2015. "Impact of Exchange Rate Volatility and Commodity Trade between U.S. and Singapore," Review of Economics & Finance, Better Advances Press, Canada, vol. 5, pages 22-40, February.
    14. M Bahmani-Oskooee & H Harvey & S.W. Hegerty, 2015. "Exchange-Rate Volatility and Commodity Trade: The Case of the US and Italy," Economic Issues Journal Articles, Economic Issues, vol. 20(2), pages 1-27, September.
    15. Auboin, Marc & Ruta, Michele, 2013. "The relationship between exchange rates and international trade: a literature review," World Trade Review, Cambridge University Press, vol. 12(3), pages 577-605, July.
    16. Erdal Demirhan & Banu Demirhan, 2015. "The Dynamic Effect of ExchangeRate Volatility on Turkish Exports: Parsimonious Error-Correction Model Approach," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(4), pages 429-451, September.
    17. Bahmani-Oskooee, Mohsen & Harvey, Hanafiah & Hegerty, Scott W., 2014. "Exchange rate volatility and Spanish-American commodity trade flows," Economic Systems, Elsevier, vol. 38(2), pages 243-260.
    18. Veysel Avsar & Kemal Turkcan, 2013. "Exchange Rate Volatility and U.S. Auto-Industry Exports: A Panel Cointegration Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 772-787.
    19. Mohsen Bahmani-Oskooee & Scott Hegerty & Amr Hosny, 2015. "The effects of exchange-rate volatility on industry trade between the US and Egypt," Economic Change and Restructuring, Springer, vol. 48(2), pages 93-117, May.

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