Foreign investment and real exchange rate volatility in emerging Asian countries

Al-Abri, Almukhtar; Baghestani, Hamid

doi:10.1016/j.asieco.2015.01.005

Cited by 30 publications

(20 citation statements)

References 38 publications

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“…Since the frequency of data is a limitation of many previous papers studying Thailand's capital flow and exchange rate [4], [5], [9] most of them use yearly or semi-annually data for studies. This paper uses the monthly data for all variables during the period of 2005-2018.…”

Section: Methodsmentioning

confidence: 99%

“…Meanwhile, the terms of trade (TOT)'s coefficient shows negative sign, which is to be expected but not statistically significant. Using equation (5) and (6), the long-run coefficient of capital inflow (β + ) equals to 0.0000, with the 10% significant level. This indicates the long-run relationship between capital inflow and real effective exchange rate of Thai Baht.…”

Section: Methodsmentioning

confidence: 99%

“…Certain research provides the evidence of the benefit and harms of capital flows to the exchange rate volatility. Al-Abri and Baghestani [5] focuses on the issue of exchange rate volatility of ASEAN countries (China, India, Malaysia, Singapore, South Korea, Indonesia, Philippines and Thailand) during the year 1980-2011. Employing time series and panel data approaches, the results suggest that the increase in capital flows can help decrease exchange rate volatility for China, India, Malaysia, Singapore and South Korea.…”

Section: Literature Reviewmentioning

confidence: 99%

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Exchange Rate and Capital Flows of Thailand

Termprasertsakul¹,

Seree-amnoui²

2020

JOEBM

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Exchange Rate and Capital Flows of Thailand

Termprasertsakul¹,

Seree-amnoui²

2020

JOEBM

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“…In this context, greater financial openness can be associated with greater export resilience. Similarly, higher inflows of foreign direct investment (FDI) (due to greater financial openness) can result in lower real exchange rate volatility (e.g., Al-Abri, 2013;Al-Abri and Baghestani, 2015). This is because higher FDI inflows can improve factor productivity, and stabilize both domestic consumption and investment spending through international risk-sharing (e.g., Agenor, 2003) and greater competition and integration in both products and factors markets (e.g., Markusen and Venables, 1999).…”

Section: Model Specificationmentioning

confidence: 99%

Development Aid and Export Resilience in Developing Countries: A Reference to Aid for Trade

Sk¹

2021

Preprint

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The COVID-19 pandemic, like previous major crises, such as the 2008 financial crisis, has had a severe negative impact on international trade flows. International institutions are now exploring ways to help their member states recover from the health crisis, and foster the resilience of their economies to future crises. As far as trade is concerned, institutions that deal primarily with trade matters are making effort to help their member states foster the resilience of their trade performance to future shocks. In this context, the World Trade Organization (WTO), which is the only international organization that deals with the global rules of trade between nations, has organized a series of events since the onset of the COVID-19 pandemic. It has now planned to hold in September 2021 the 2021 WTO Public Forum whose theme is "Trade Beyond COVID-19: Building Resilience". The present paper aims to contribute to this debate by examining the effect of development aid, i.e., the so-called official development aid, in particular its Aid for Trade (AfT) component, on export resilience. The resilience of exports refers to the capacity of countries' aggregate exports to resist to shocks, whether environmental or external shocks. The core argument of the analysis is that development aid would affect export resilience through its effect on productive capacities. The analysis covers 93 developing countries over the period 2002-2018. The findings indicate that total development aid flows, including both AfT flows and NonAfT flows exert a positive effect on export resilience. Among AfT components, AfT for productive capacities appears to exert a higher positive effect on export resilience than AfT for economic infrastructure and AfT for trade policy and regulation. In addition, development aid (whatever the aid variable considered) exerts the highest positive effect on export resilience in countries (such as Least developed countries - LDCs) that have the lowest level of productive capacities. These findings highlight the need for donor-countries to supply higher development aid flows, in particular AfT flows to countries such as LDCs that have low levels of productive capacities.

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“…In addition, we focus on the real (not nominal) effective exchange rate, since it accounts for the relative price of domestic and foreign goods and, thus, helps assess the UAE’s trade competitiveness in the world economy. The literature points to the real exchange rate as one of the key drivers of economic growth and employment through its influence on both trade and FDI (Goldberg and Klein, ; Villavicencio and Bara, ; Al‐Abri and Baghestani, ; Guzman et al , ). In particular, Guzman et al () emphasise the importance of a stable and competitive real exchange rate policy for both macro‐stability and economic development.…”

Section: Introductionmentioning

confidence: 99%

Predicting United Arab Emirates' real effective exchange rates using oil prices

Baghestani

AbuAl-Foul

2019

OPEC Energy Review

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We examine whether oil prices help produce accurate forecasts of the real broad effective exchange rate of the United Arab Emirates (UAE). Using monthly data for 1994–1999, we formulate a univariate moving average (MA) and an augmented moving average (A‐MA) model to generate multi‐period forecasts of UAE real exchange rates for 2000–2019. The MA model utilises past information in real exchange rates, while the A‐MA model utilises past information in both real exchange rates and oil prices. Our results indicate that oil prices help produce accurate forecasts of UAE real exchange rates only for 2000–2009; that is, for this period, the A‐MA forecasts are unbiased, outperform the MA forecasts and are directionally accurate. As for 2009–2019, we take a non‐parametric approach and show that oil price changes accurately predict directional change in UAE real effective exchange rates.

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Foreign investment and real exchange rate volatility in emerging Asian countries

Cited by 30 publications

References 38 publications

Exchange Rate and Capital Flows of Thailand

Exchange Rate and Capital Flows of Thailand

Development Aid and Export Resilience in Developing Countries: A Reference to Aid for Trade

Predicting United Arab Emirates' real effective exchange rates using oil prices

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