Some Further Evidence on Exchange-Rate Volatility and Exports

Hondroyiannis, George; Swamy, P. A. V. B.; Tavlas, George S.; Ulan, Michael

doi:10.1007/s10290-008-0141-4

Cited by 61 publications

(33 citation statements)

References 20 publications

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“…But for the trading partner countries whose real GDP per capita is over a threshold level, the negative impact of increased volatility on the US exports become apparent in their analysis. Moreover, Hondroyiannis et al (2008) investigate the relationship between exchange rate volatility and aggregated export volumes of 12 industrialized countries by using the sample period of 1977-2003. They conclude that while a little evidence is found about the negative impact of the exchange rate volatility on trade, the negative sign on this effect can arise from the omitted-variable biases and/ or measurement-error biases.…”

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

Agric. 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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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

Agric. Econ. - Czech

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“…The results obtained will be compared to similar regressions on unilateral trade, measuring exports, where Export ij denotes exports from country i to country j. 28 The purpose here is twofold. Firstly, it will give an indication of whether the introduction of the euro has induced any agglomeration e¤ects on economic activity.…”

Section: On the Economic Geography Of The Euromentioning

confidence: 99%

The effect of the euro on foreign direct investment

Petroulas¹

2007

European Economic Review

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In this paper the recent effect of the European Monetary Union on inward FDI-flows is examined. We use a difference-in-differences approach for both a gravity based-as well as a general equilibrium approach. The estimated results show that the introduction of the euro raises inward FDI by 14 to 16 percent within the euro area by 11 to 13 percent from non-member and weakly by 8 percent to non-member countries. Moreover the geographical effects of the euro are explored. The results show partial agglomeration tendencies for the euro area. There are also some indications of increased importance of vertical specialization in the sample.

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“…This is, for instance, the case with Hondroyiannis et al (2008). They use a sample of 12 industrialized countries, for which they fail to find a significant effect over the period 1977-2003.…”

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confidence: 99%

The relationship between exchange rates and international trade: a literature review

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper surveys a wide body of economic literature on the relationship between currencies and trade. Specifically, two main issues are investigated: the impact on international trade of exchange rate volatility and of currency misalignments. On average, exchange rate volatility has a negative (even if not large) impact on trade flows. The extent of this effect depends on a number of factors, including the existence of hedging instruments, the structure of production (e.g. the prevalence of small firms), and the degree of economic integration across countries. The second issue involves exchange rate misalignments, which are predicted to have shortrun effects in models with price rigidities. However, the exact impact depends on a number of features, such as the pricing strategy of firms engaging in international trade and the importance of global production networks. This effect is predicted to disappear in the longrun, unless some other distortion characterizes the economy. Empirical results confirm that short-run effects can exist, but their size and persistence over time are not consistent across different studies. Terms of use: Documents inJEL-Code: F100, F310, F550.

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Some Further Evidence on Exchange-Rate Volatility and Exports

Abstract: Exchange-rate volatility, trade, random-coefficient estimation, generalized method of moments, panel data,

Cited by 61 publications

References 20 publications

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

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

The effect of the euro on foreign direct investment

The relationship between exchange rates and international trade: a literature review

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