IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v34y2011i2p319-330.html
   My bibliography  Save this article

Exchange rate volatility and domestic consumption: a multicountry analysis

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Dan Xi

Abstract

Inflation uncertainty, measured by the volatility of inflation, is said to have a negative effect on domestic consumption by making the public more cautious about their spending. Since exchange rate volatility contributes to inflation volatility, we conjecture that it could have a direct effect on domestic consumption. We demonstrate our conjecture by specifying a consumption function that includes a measure of exchange rate volatility, in addition to its usual determinants. The model is estimated for each of the 17 countries in the sample using the boundstesting approach to cointegration and error-correction modeling. The results reveal that in 12 of the countries, exchange rate volatility has short-run effects on consumption. Long-run effects are observed in only 9 countries.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Dan Xi, 2011. "Exchange rate volatility and domestic consumption: a multicountry analysis," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(2), pages 319-330.
  • Handle: RePEc:mes:postke:v:34:y:2011:i:2:p:319-330
    DOI: 10.2753/PKE0160-3477340207
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.2753/PKE0160-3477340207
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.2753/PKE0160-3477340207?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Okwu, Andy & Akpa, Emeka & Oseni, Isiaq & Obiakor, Rowland, 2020. "Oil Export Revenue and Exchange Rate: An Investigation of Asymmetric Effects on Households’ Consumption Expenditure in Nigeria," MPRA Paper 102080, University Library of Munich, Germany.
    2. Gülsüm Akarsu, 2017. "Analyzing the impact of oil price volatility on electricity demand: the case of Turkey," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 7(3), pages 371-388, December.
    3. Bahmani-Oskooee, Mohsen & Maki Nayeri, Majid, 2020. "Policy uncertainty and consumption in G7 countries: An asymmetry analysis," International Economics, Elsevier, vol. 163(C), pages 101-113.
    4. Bernard Njindan Iyke & Sin-Yu Ho, 2017. "Exchange rate uncertainty and domestic investment in Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1362157-136, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:34:y:2011:i:2:p:319-330. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.