Exchange-Rate Volatility And Industry Trade Between The U.S. And Korea
Even though numerous empirical studies have investigated the effects of the post-Bretton Woods increase in exchange-rate volatility, they have not reached a consensus whether this uncertainty universally reduces trade flows. As a result, recent studies have employed industry-level data to further isolate the causes of these ambiguous results. In this study, we investigate U.S. trade with South Korea, both at the bilateral level and for 96 U.S. export and 29 U.S. import industries. We find that exchange rate volatility has significant short-run effects on most industries¡¯ exports and imports. In the long run, however, only 16 exporting industries and seven importing industries are affected by volatility (some positively and some negatively). Most affected industries are small, as measured by their trade share.
Volume (Year): 37 (2012)
Issue (Month): 1 (March)
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