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Exchange-rate variability and industry trade flows between Malaysia and Japan

Author

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  • Muhammad Aftab
  • Karim Bux Shah Syed
  • Rubi Ahmad
  • Izlin Ismail

Abstract

This research investigates the exchange-rate risk sensitivity of Malaysian bilateral trade flows with its important trading partner, Japan. To this end, bounds testing approach to co-integration is applied using industry level data over the monthly period 2000--2013. Findings suggest that above the one-third of the total co-integrated export (43.86%) and import (34.54%), industries experiences the ringgit/yen variability effect in the short run. However, this effect sustains in relatively less number of export (14.03%) and import (32.73%) industries in the long run. It is interesting to note that exchange-rate risk boosts trade flows in the majority of these affected industries.

Suggested Citation

  • Muhammad Aftab & Karim Bux Shah Syed & Rubi Ahmad & Izlin Ismail, 2016. "Exchange-rate variability and industry trade flows between Malaysia and Japan," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(4), pages 453-478, June.
  • Handle: RePEc:taf:jitecd:v:25:y:2016:i:4:p:453-478
    DOI: 10.1080/09638199.2015.1065901
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    Cited by:

    1. BAHMANI-OSKOOEE, Mohsen & Aftab, Muhammad, 2017. "A new perspective on the third country effect: The case of Malaysia-US industry level trade," MPRA Paper 82997, University Library of Munich, Germany, revised 13 Feb 2017.

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