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Asymmetric Effects Of Exchange Rate Volatility On Bilateral Trade Between Taiwan And Indonesia

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  • MEI-SE CHIEN

    (Department of Finance and Information, National Kaohsiung University of Science and Technology, 415 Chien Kung Road, Kaohsiung 807, Taiwan)

  • NUR SETYOWATI

    (#x2020;Department of International Business, National Kaohsiung University of Science and Technology, Taiwan‡Accounting Department, Politeknik Negeri Semarang, Indonesia)

  • CHIH-YANG CHENG

    (#xA7;Department of Finance, National Sun Yat-Sen University, Taiwan)

Abstract

This paper investigates the effect of exchange rate volatility on bilateral trade between Taiwan and Indonesia via 19 export and import industries. Considering the existence of an asymmetric effect of exchange rate volatility on trade, we employ an asymmetric ARDL model and arrive at the following main results. First, the long-run asymmetric effect of exchange rate volatility shows far higher impacts on Taiwan’s exports to Indonesia than on Taiwan’s imports from Indonesia. Second, the short-run asymmetric effect of exchange rate volatility causes unstable changes on the trade amounts for most of Taiwan’s export and import industries with Indonesia.

Suggested Citation

  • Mei-Se Chien & Nur Setyowati & Chih-Yang Cheng, 2020. "Asymmetric Effects Of Exchange Rate Volatility On Bilateral Trade Between Taiwan And Indonesia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(04), pages 857-888, June.
    • Handle: RePEc:wsi:serxxx:v:65:y:2020:i:04:n:s021759082050006x
    DOI: 10.1142/S021759082050006X
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    2. Lee, Chien-Hui & Li, Shu-Hui & Lee, Jen-Yu, 2022. "An asymmetric impact analysis of the exchange rate volatility on commodity trade between the U.S. and China," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 399-415.

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