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Impact of exchange rate volatility on the commodity trade between Pakistan and the US

Listed author(s):
  • Mohsen Bahmani-Oskooee

    ()

    (The University of Wisconsin-Milwaukee)

  • Javed Iqbal

    ()

    (Quaid-i-Azam University)

  • Saqib Ullah Khan

    ()

    (Quaid-i-Azam University)

Abstract The impact of exchange rate volatility on the trade flows has been intensively studied by researchers after the adoption of flexible exchange rate system. Different studies have used data from different countries at different aggregation level. In this paper we consider the experiences of 57 Pakistan’s exporting to and 52 importing industries from the US over the period 1980–2014. We find that almost 50 % of the industries are affected by exchange rate volatility in the short-run. However, short-run effects last into the long run only in 26 exporting industries and 18 importing industries. Due to such disaggregation we find that all four large exporting and importing industries are affected positively in the long run. The list includes industries coded 656 (made up articles with 32.45 % of exports share), 841 (clothing with 50.7 % exports share), 263 (cotton with 8.64 % import share) and 282 (iron and steel scrap with 2.10 % imports share).

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File URL: http://link.springer.com/10.1007/s10644-016-9187-9
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Article provided by Springer in its journal Economic Change and Restructuring.

Volume (Year): 50 (2017)
Issue (Month): 2 (May)
Pages: 161-187

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Handle: RePEc:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9187-9
DOI: 10.1007/s10644-016-9187-9
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/economics/development/journal/10644/PS2

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  1. Abdul Jalil Khan & Parvez Azim & Shabib Haider Syed, 2014. "The Impact of Exchange Rate Volatility on Trade: A Panel Study on Pakistan’s Trading Partners," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(1), pages 31-66, Jan-June.
  2. Sauer, Christine & Bohara, Alok K, 2001. "Exchange Rate Volatility and Exports: Regional Differences between Developing and Industrialized Countries," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 133-152, February.
  3. Ferda Halicioglu, 2007. "The J-curve dynamics of Turkish bilateral trade: a cointegration approach," Journal of Economic Studies, Emerald Group Publishing, vol. 34(2), pages 103-119, May.
  4. Ferda Halicioglu, 2013. "Dynamics of obesity in Finland," Journal of Economic Studies, Emerald Group Publishing, vol. 40(5), pages 644-657, October.
  5. repec:kap:iaecre:v:9:y:2003:i:1:p:7-19 is not listed on IDEAS
  6. Kumar, Ramesh & Dhawan, Ravinder, 1991. "Exchange rate volatility and Pakistan's exports to the developed world, 1974-85," World Development, Elsevier, vol. 19(9), pages 1225-1240, September.
  7. Mohsen Bahmani-Oskooee & Scott W. Hegerty, 2009. "The Effects of Exchange-Rate Volatility on Commodity Trade between the United States and Mexico," Southern Economic Journal, Southern Economic Association, vol. 75(4), pages 1019-1044, April.
  8. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
  9. Mohsen Bahmani-Oskooee, 2007. "Exchange rate volatility and trade flows: a review article," Journal of Economic Studies, Emerald Group Publishing, vol. 34(3), pages 211-255, August.
  10. Mohsen Bahmani-Oskooee & Claire Economidou & Gour Gobinda Goswami, 2005. "How sensitive are Britain's inpayments and outpayments to the value of the British pound," Journal of Economic Studies, Emerald Group Publishing, vol. 32(5), pages 455-467, October.
  11. Seyed Komail Tayebi & Mehdi Yazdani, 2014. "Financial crisis, oil shock and trade in Asia," Journal of Economic Studies, Emerald Group Publishing, vol. 41(4), pages 601-614, July.
  12. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  13. Hock Tsen Wong, 2013. "Real exchange rate misalignment and economic growth in Malaysia," Journal of Economic Studies, Emerald Group Publishing, vol. 40(3), pages 298-313, May.
  14. Khalid Mustafa & Mohammed Nishat, 2004. "Volatility of Exchange Rate and Export Growth in Pakistan: The Structure and Interdependence in Regional Markets," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 813-828.
  15. Bahmani-Oskooee, Mohsen & Tankui, Altin, 2008. "The black market exchange rate vs. the official rate in testing PPP: Which rate fosters the adjustment process?," Economics Letters, Elsevier, vol. 99(1), pages 40-43, April.
  16. Hock Tsen Wong, 2013. "Real exchange rate misalignment and economic growth in Malaysia," Journal of Economic Studies, Emerald Group Publishing, vol. 40(3), pages 298-313, July.
  17. Najia Saqib & Irfan Sana, 2012. "Exchange Rate Volatility and its Effect on Pakistan’s Export Volume," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 2(4), pages 1-7.
  18. Glauco De Vita, 2008. "Determinants of capital flows to developing countries: a structural VAR analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 35(4), pages 304-322, September.
  19. James E. Payne, 2008. "Inflation and inflation uncertainty: evidence from the Caribbean region," Journal of Economic Studies, Emerald Group Publishing, vol. 35(6), pages 501-511, October.
  20. Mohsen Bahmani-Oskooee & Zohre Ardalani, 2006. "Exchange Rate Sensitivity of U.S. Trade Flows: Evidence from Industry Data," Southern Economic Journal, Southern Economic Association, vol. 72(3), pages 542-559, January.
  21. 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.
  22. Bahmani-Oskooee, Mohsen, 1986. "Determinants of international trade flows : The Case of Developing Countries," Journal of Development Economics, Elsevier, vol. 20(1), pages 107-123.
  23. Mohsen Bahmani-Oskooee & Ruixin Zhang, 2014. "Is there J-Curve effect in the commodity trade between Korea and rest of the world?," Economic Change and Restructuring, Springer, vol. 47(3), pages 227-250, August.
  24. Bahmani-Oskooee, Mohsen & Ltaifa, Nabil, 1992. "Effects of exchange rate risk on exports: crosscountry analysis," World Development, Elsevier, vol. 20(8), pages 1173-1181, August.
  25. Augustine Arize & John Malindretos & Krishna Kasibhatla, 2003. "Does exchange-rate volatility depress export flows: The case of LDCs," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(1), pages 7-19, February.
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