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

Author

Listed:
  • Mohsen Bahmani-Oskooee

    () (The University of Wisconsin-Milwaukee)

  • Javed Iqbal

    () (Quaid-i-Azam University)

  • Saqib Ullah Khan

    () (Quaid-i-Azam University)

Abstract

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).

Suggested Citation

  • Mohsen Bahmani-Oskooee & Javed Iqbal & Saqib Ullah Khan, 2017. "Impact of exchange rate volatility on the commodity trade between Pakistan and the US," Economic Change and Restructuring, Springer, vol. 50(2), pages 161-187, May.
  • Handle: RePEc:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9187-9
    DOI: 10.1007/s10644-016-9187-9
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Exchange rate uncertainty; Industry data; Bounds testing; Pakistan; The United States;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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