On the (a)symmetric effects of real exchange rate on trade flows: new evidence from US–Vietnam trade balance at the industry level

Ho, Sy-Hoa; Nguyen, Trung-Thanh; To‐The, Nguyen

doi:10.1080/13547860.2021.1884346

Cited by 8 publications

(7 citation statements)

References 26 publications

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“…Thus, this is consistent with the definition of the symmetric J‐curve proposed by Rose and Yellen (1989), especially in the largest trade share industry (i.e., electrical machinery and equipment, code 85). Furthermore, this result is consistent with Ho et al (2023) who suggest a positive exchange rate effect on the trade balance of electrical machinery between the United States and Vietnam. Moreover, seven industries (15, 16, 17, 18, 76, 81, and 95) are characterised by a negatively correlated and statistically significant LnREX t , respectively.…”

Section: Analysis and Discussionsupporting

confidence: 92%

Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries

Zhao,

Liu

2023

Asian-Pac Economic Lit

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The real bilateral exchange rate between Korean won and Chinese yuan is a crucial factor in balancing trade between Korea and China and has implications for both academics and policymakers. Prior research using symmetry hypotheses on bilateral trade and its heterogeneity among industries is limited. This study re‐examines the symmetric and asymmetric J‐curve phenomenon between them, employing the linear and nonlinear autoregressive distributed lag models. It considered the January 2008–June 2022 trade balance of 75 industries. This analysis shows support for the symmetric (asymmetric) J‐curve in 4 of 12 industries from the linear (nonlinear) model, accounting for 58.55% of the total trade between Korea and China. Furthermore, short‐ and long‐run asymmetries are detected in most industries, affirming the suitability of the nonlinear ARDL method.

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Section: Analysis and Discussionsupporting

confidence: 92%

Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries

Zhao,

Liu

2023

Asian-Pac Economic Lit

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“…Our conclusions are consistent with Sy-Hoa et al (2021), who concludes that volatility influences total trade between the USA and Vietnam to a different extent for specific industries, and it does not influence most industries at all. Baum et al (2004) and Bahmani-Oskooee and Saha (2020) prove that this relationship may depend on the country and that for some of them it does not exist; so we show that for Poland-USA trade relations, it depends on both the studied sector and the employed methodology.…”

Section: Discussionsupporting

confidence: 92%

“…(2021) – and include structural breaks, as in Ibarra and Blecker (2016) and Fitrianti (2017). Although the findings refer to countries whose bilateral trade has not been analyzed so far (Poland and the USA), they agree with Bahmani-Oskooee and Karamelikli (2021, 2022), Bahmani-Oskooee and Karamelikli (2021) and Sy-Hoa et al. (2021), who show that there are no significant effects in the majority of industries both for positive and negative exchange rate changes.…”

Section: Literature Reviewsupporting

confidence: 58%

“…There are ambiguous effects for exchange rate volatility. Sy-Hoa, Trung-Thanh, and To-The (2021) concludes that total trade between the USA and Vietnam is symmetrically influenced by volatility, but the effects are mixed for specific industries. Bahmani-Oskooee and Saha (2020) prove that this relationship may depend on the country and that for some of them it does not exist.…”

Section: Literature Reviewmentioning

confidence: 98%

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Poland–USA sectoral trade balances: regime shifts and the nonlinear impact of currency fluctuations

Pruchnicka-Grabias,

Piekunko-Mantiuk,

Hegerty

2023

CEMJ

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PurposeThe Polish economy has undergone major challenges and changes over the past few decades. The country's trade flows, in particular, have become more firmly tied to the country’s Western neighbors as they have grown in volume. This study examines Poland's trade balances in ten Standard International Trade Classification (SITC) sectors versus the United States of America, first testing for and isolating structural breaks in each time series. These breaks are then included in a set of the cointegration models to examine their macroeconomic determinants.Design/methodology/approachLinear and nonlinear and nonlinear autoregressive distributed lag models, both with and without dummies corresponding to structural breaks, are estimated.FindingsOne key finding is that incorporating these breaks reduces the significance of the real exchange rate in the model, supporting the hypothesis that this variable already incorporates important information. It also results in weaker evidence for cointegration of all variables in certain sectors.Research limitations/implicationsThis study looks only at one pair of countries, without any third-country effects.Originality/valueAn important country pair's trade relations is examined; in addition, the real exchange rate is shown to incorporate economic information that results in structural changes in the economy. The paper extends the existing literature by conducting an analysis of Poland's trade balances with the USA, which have not been studied in such a context so far. A strong point is a broad methodology that lets compare the results the authors obtained with different kinds of models, both linear and nonlinear ones, with and without structural breaks.

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“…Thus, the real effective exchange rate between MYR and all currencies of the EU-28 can be more appropriate. Apart from Malaysia, other countries such as the Philippines (Arize et al, 2017), Singapore (Arize et al, 2017), Thailand (Bahmani-Oskooee & Kanitpong, 2019), and Vietnam (Ho et al, 2021) have also been analyzed by the existing papers conducted at industry level.…”

Section: Literature Reviewmentioning

confidence: 99%

The Roles of Vehicle Currency and Real Effective Exchange Rates in the Trade of Every ASEAN Member With the EU-28

Bao

2022

SAGE Open

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A common limitation of the studies on the exchange rate-trade balance linkage is ignoring the USD’s role as a vehicle currency. Some recent papers have recognized this gap and proposed a hypothesis that the neglection of the USD’s role as a vehicle currency can restrict the significance of findings. This study aims to test that hypothesis in the trade between each of the 10 countries in ASEAN (Association of Southeast Asian Nations) with the whole EU-28. Specifically, this paper is the first to examine how the vehicle currency USD’s exchange rates, along with the real effect exchange rates, asymmetrically impact the trade balance of each ASEAN country with the EU-28 by employing the NARDL method to investigate whether the ignorance of the USD leads to fewer significant coefficients of exchange rates. The results indicate that the vehicle currency model (VCER) outperforms the real effective exchange rate (REER) model, which supports the hypothesis. In addition, the results are robust when controlling for the role of exchange rate volatility.

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On the (a)symmetric effects of real exchange rate on trade flows: new evidence from US–Vietnam trade balance at the industry level

Cited by 8 publications

References 26 publications

Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries

Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries

Poland–USA sectoral trade balances: regime shifts and the nonlinear impact of currency fluctuations

The Roles of Vehicle Currency and Real Effective Exchange Rates in the Trade of Every ASEAN Member With the EU-28

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