The Effect of Exchange Rate Volatility on International Trade: The Implication for Production Networks in East Asia
This paper is an empirical investigation of the relationship between exchange rate volatility and international trade, focusing on East Asia. It finds that intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions because intermediate goods trade in production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of trade. In addition, this negative effect of volatility is mainly induced by the unanticipated volatility and has an even greater impact than that of tariffs.
|Date of creation:||May 2008|
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|Publication status:||Published in IDE Discussion Paper. No. 156. 2008.5|
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- Mitsuyo Ando & Fukinari Kimura, 2003.
"The Formation of International Production and Distribution Networks in East Asia,"
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10167, National Bureau of Economic Research, Inc.
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8881, National Bureau of Economic Research, Inc.
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- ITO Takatoshi & KOIBUCHI Satoshi & SASAKI Yuri & SATO Kiyotaka & SHIMIZU Junko & HAYAKAWA Kazunobu & YOSHIMI Taiyo, 2008. "Currency Invoicing and Foreign Exchange Risk Management: A Case Study of Japanese Firms (Japanese)," Discussion Papers (Japanese) 08009, Research Institute of Economy, Trade and Industry (RIETI).
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