Exchange Rate Volatility and International Trade

Eckwert, Bernhard; Бролл, Удо

doi:10.2307/1060843

Cited by 126 publications

(90 citation statements)

References 18 publications

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“…However, authors such as Broll and Eckwert (1999) show the theoretical possibility of a positive relationship between exchange rate volatility and exports. The reason for this possibility is that as exchange rate volatility increases so does the real option to export to the world market.…”

Section: Literature Reviewmentioning

confidence: 99%

Exchange rate volatility and international trade: International evidence from the MINT countries

Masatci²,

2016

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This paper examines the effect of exchange rate volatility on international trade activities for Mexico, Indonesia, Nigeria, and Turkey. We use volatility predicted from GARCH models for both nominal and real effective exchange rate data. To detect the long term relationship we use the autoregressive distributed lag (ARDL) bound testing approach; while for the short term effects, Granger causality models are employed. The results show that, in long term, there is no linkage between exchange rate volatility and international trade activities except for Turkey and even in this case the magnitude of the effect of volatility is quite small. In the short term, however, a significant causal relationship from volatility to import/export demand is detected for Indonesia and Mexico. In the case of Nigeria unidirectional causality from export demand to volatility is found, while for Turkey no causality between volatility and import/export demand is detected.

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Section: Literature Reviewmentioning

confidence: 99%

Exchange rate volatility and international trade: International evidence from the MINT countries

Masatci²,

2016

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“…Similarly, Thursby and Thursby (1987), Pick (1990), Chowdhury (1993), Arize et al (2000Arize et al ( , 2008, Doganlar (2002), Chit et al (2010), Zhao (2010) and Kafle and Kennedy (2012) find that the exchange rate volatility has had a negative impact on trade flows. On the other hand, Klein (1990), Pick (1990), Broll and Eckwert (1999), Awokuse and Yuan (2006), Choudhry (2008) and Jozsef (2011) are some of the researchers who report a positive impact of the exchange rate volatility on agricultural and the total trade flows.…”

Section: Literature Reviewmentioning

confidence: 99%

The effect of real exchange rates and their volatilities on the selected agricultural commodity exports: A case study on Turkey, 1971-2010

Yanıkkaya¹,

Kaya²,

Koçtürk³

2013

AGR ECON-CZECH

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235After the collapse of the Brettonwood system in 1973, most of the countries have abandoned to use solely the fixed exchange rate regime, and different countries have adapted different exchange rate regimes. Then, the impact of both the exchange rate level and the exchange rate volatility or variability especially on exports, the bilateral trade flows and the volumes of trade have been empirically and theoretically discussed.A large number of studies examine both the effect of the exchange rate and its volatility on agricultural trade. However, no consensus was reached yet on the relationship between the exchange rate and agricultural trade. As discussed in the literature, it is important to use disaggregated data and/or data on the individual commodities to get more meaningful results on the size and magnitude of the effects of the real exchange rates on agricultural commodities trade. (Awokuse and Yuan 2006;Byrne et al. 2008;Bahmani-Oskooee and Hegerty 2009;Karemera et al. 2011). Byrne et al. (2008) discuss the possibility of finding a negative effect of the exchange rate volatility on trade by pooling the data of all industries together, and claim that the disaggregation of the data such as firm, industry or commodity level could provide more appropriate and meaningful results. Considering the individual sectors and/or commodities is vitally important to understand the exact nature of the relation and to further tailor effective policy measures based on these fine results. Thus, we investigate the relationship between the real exchange rates and several of the most important Turkish agricultural commodities. They represent almost a quarter of the overall Turkish agricultural exports. LITERATURE REVIEWA number of studies ( Hooper and Kohlhagen 1978;Arize et al. 2008;Kafle and Kennedy 2012) argue that the exchange rate volatility can have a negative effect on the international trade flows, either directly through the uncertainty and adjustment costs or indirectly through its effect on the allocation of resources and government policies. The volatile nature of exchange rates has always led risk-averse traders to reduce their trading activities ultimately reducing the international trade flows. However, Arize et al. Abstract: Th is study investigates the eff ect of the exchange rate volatility and the real exchange rate on the bilateral agricultural exports fl ows of Turkey to 46 countries. A panel data set, which contains 46 cross-sections and 1840 observations, is used for exports of the selected agricultural commodities to countries from 1971 to 2010. Our empirical results based on a gravity equation show that while the exchange rate volatility does not exert a signifi cant eff ect on the Turkish agricultural commodity exports, the real exchange rate has a statistically signifi cant eff ect on the agricultural commodity export fl ows. Regardless of the region chosen, raisins and tobacco exports are very much sensitive to the real exchange rates. It means that any depreciation in the Turkish Lira leads to hig...

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“…Our results on the e¤ect of real exchange 1 See the survey article by Côté (1994) and the references therein. More recent theoretical papers are Broll and Eckwert (1997) and Bacchetta and Van Wincoop (1998). Recent empirical work includes Caporale and Doroodian (1994), Qian and Varangis (1994), Arize (1995) and Fountas and Aristotelous (1999).…”

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confidence: 99%

Why is it So Difficult to Find an Effect of Exchange Rate Risk on Trade?

Klaassen

2000

SSRN Journal

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It is commonly argued that exchange rate risk depresses international trade.However, the large literature on this subject has not yet provided conclusive evidence. This paper analyzes why it is so di¢cult to obtain a clear answer from time series analyses. We use data on bilateral aggregate U.S. exports to the other G7 countries. The results show that export decisions are mostly a¤ected by the exchange rate about one year later. The riskiness of the exchange rate at such a long horizon appears fairly constant over time with only short-term ‡uctuations. This makes it di¢cult to discover the true e¤ect of exchange risk on trade from the limited time series data that are typically available.

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Exchange Rate Volatility and International Trade

Cited by 126 publications

References 18 publications

Exchange rate volatility and international trade: International evidence from the MINT countries

Exchange rate volatility and international trade: International evidence from the MINT countries

The effect of real exchange rates and their volatilities on the selected agricultural commodity exports: A case study on Turkey, 1971-2010

Why is it So Difficult to Find an Effect of Exchange Rate Risk on Trade?

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