Exchange Rate Volatility and Exports for Selected East Asian Countries: Evidence from Error Correction Model

Poon, Wai Ching; Choong, Chee‐Keong; Habibullah, Muzafar Shah

doi:10.1355/ae22-2b

Cited by 47 publications

(28 citation statements)

References 46 publications

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“…Therefore, the variables for both developed countries and export-oriented LDCs were indeed cointegrated. The results are consistent with the finding of prior empirical studies (Poon et al, 2005;Arize et al, 2000). Level of variables is applied in the OLS regression for estimating the long run relationships.…”

Section: Unit Root Tests and Co-integrationssupporting

confidence: 88%

The Impact of Real Exchange Rate Volatility on Exports to U.S.: A Comparison between Developed and Export-oriented Less Developed Countries

Situ¹

2015

IJBM

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Real exchange rate volatility on exports is an important topic in international trade and finance. However, litter studies analyzed whether the effect of real exchange rate volatility on export will change overtime. This paper categorizes the countries into two groups, namely the developed countries and export oriented less developed countries (LDCs), and divided the whole time period into two sub-periods, i.e. 1994 to 2007 and 2008 to 2014, in order to study whether the effects of volatility on exports to U.S. were different for countries with different economic characteristics and whether it changed over time. At the end, this paper discovered that the real exchange rate volatility had a bigger impact on developed countries than export-oriented LDCs, and the impact had increased in the later period. The weaker flexibility in distribution network of firms also explained why export-oriented LDCs' exports are less sensitive to real exchange rate volatility.

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Section: Unit Root Tests and Co-integrationssupporting

confidence: 88%

The Impact of Real Exchange Rate Volatility on Exports to U.S.: A Comparison between Developed and Export-oriented Less Developed Countries

Situ¹

2015

IJBM

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“…2 On the other side of the coin, once production networks are in place, transactions become stable, which suggests the existence of network restructuring cost. 3 There are also previous studies that focus special attention on East Asia, for example, Bénassy-Quéré and Lahrèche-Révil (2003), Poon et al (2005), Chit et al (2008), and Thorbecke (2008). While these papers employ different approaches, such as an error-correction model and panel data techniques, different sample period, and different sample countries, all these papers found a negative relationship between exports and exchange rate volatility in East Asia.…”

Section: Introductionmentioning

confidence: 98%

The effect of exchange rate volatility on international trade in East Asia

Hayakawa

Kimura

2009

Journal of the Japanese and International Economies

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JEL classification: F10 F31 N75 Keywords:Exchange rate volatility Trade East Asia a b s t r a c t Hayakawa, Kazunobu, and Kimura, Fukunari-The effect of exchange rate volatility on international trade in East AsiaIn this paper, we empirically investigate the relationship between exchange rate volatility and international trade, focusing on East Asia. Our findings are summarized as follows: first, intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions. Second, one important source of the discouragement is that intermediate goods trade in international production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of East Asian trade. Third, the negative effect of the volatility is greater than that of tariffs and smaller than that of distancerelated costs in East Asia. J. Japanese Int. Economies xxx (xx) (2009) xxx-xxx. Inter-disciplinary Studies Center, Institute of Developing Economies,

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“…Ito and Yoshida (2006), seeking to explain East Asian exports in the context of a triangular trading model using annual data from 1990 to 2000, found that exchange rate volatility did not help to explain East Asian exports to the U.S. Poon et al (2005), using an error-correction model and more than 20 years of quarterly data for five East Asian countries, reported that exchange rate volatility reduced total exports for Japan, South Korea, and Singapore. Bénassy-Quéré and Lahrèche-Révil (2003), using panel data techniques and annual data from 1984 to 2001, reported that exchange rate volatility did not affect exports from one East Asian country to other East Asian countries.…”

mentioning

confidence: 99%

The effect of exchange rate volatility on fragmentation in East Asia: Evidence from the electronics industry

Thorbecke

2008

Journal of the Japanese and International Economies

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Thorbecke, Willem-The effect of exchange rate volatility on fragmentation in East Asia: Evidence from the electronics industry East Asia is characterized by intricate production and distribution networks that allow fragmented production blocks to be allocated across countries based on comparative advantage. These networks have produced enormous efficiency gains. Exchange rate volatility, by increasing uncertainty, may reduce the locational benefits of cross-border fragmentation. This paper presents evidence that exchange rate volatility decreases the flow of electronic components within East Asia. Electronic components is by far the largest category of intermediate goods traded within these networks. These results imply that policy makers should consider how to maintain stable exchange rates in the region in order to provide a steady backdrop for East Asian production networks.

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Exchange Rate Volatility and Exports for Selected East Asian Countries: Evidence from Error Correction Model

Cited by 47 publications

References 46 publications

The Impact of Real Exchange Rate Volatility on Exports to U.S.: A Comparison between Developed and Export-oriented Less Developed Countries

The Impact of Real Exchange Rate Volatility on Exports to U.S.: A Comparison between Developed and Export-oriented Less Developed Countries

The effect of exchange rate volatility on international trade in East Asia

The effect of exchange rate volatility on fragmentation in East Asia: Evidence from the electronics industry

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