Exchange rate movements, export sophistication and direction of trade: the development channel and North–South trade flows

2019 ◽  
Vol 43 (6) ◽  
pp. 1623-1652
Author(s):  
Mustafa Caglayan ◽  
Firat Demir
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Trade Flows ◽  
Product Categories ◽  
Exchange Rate Movements ◽  
Bilateral Trade Flows ◽  
Primary Goods ◽  
Development Literature ◽  
The Empirical Analysis ◽  
High Skill

Abstract We study the effects of real exchange rate (RER) changes on trade flows considering the skill content and origin/destination of products in a North–South framework. The empirical analysis is based on bilateral trade flows in five product categories of technology-and-skill intensities between 172 countries during 1962–2012. Consistent with the development channel, we find that both the composition and direction of trade affect how exports respond to RER changes. We find that high-skill manufactures and primary goods are the least affected from RER depreciation and volatility. The strongest effects are found for medium-skill, low-skill and resource-intensive manufactures. We also show that these effects depend on the direction of trade. Southern exports are more sensitive to RER than Northern exports in all product categories except for primary goods. Regarding volatility, South–North exports are hurt the most while North–South the least. Also, South–South exports appear to be less sensitive to volatility in all product groups than South–North. Overall, this paper provides a synthesis of the recent neoclassical international trade literature with the heterodox development literature.

Exchange-Rate Volatility and Industry Trade Between Japan and China

2012 ◽  
Vol 12 (3) ◽  
pp. 1850268 ◽  
Author(s):  
Mohsen Bahmani-Oskooee ◽  
Scott W. Hegerty ◽  
Jia Xu
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Exchange Rate Volatility ◽  
Trade Flows ◽  
Negative Effects ◽  
Exchange Rate Uncertainty ◽  
Long Run ◽  
Bilateral Trade Flows ◽  
Short Run ◽  
Export Industries

Exchange-rate risk is often thought to reduce international trade flows, but numerous theoretical and empirical analyses have pointed toward positive as well as negative effects. This is particularly true when bilateral trade flows for individual industries are estimated. In this study, we extend the literature to the case of Japanese trade with China for 110 import industries and 95 export industries. Aggregate Japanese exports, but not imports, respond to real exchange rate volatility in the long run, while most individual export and import industries respond in the short run. Although many individual Japanese import industries are affected in the long run by risk, mostly negatively, this is even more the case for exporters. A larger proportion of Japanese export industries are affected by exchange rate uncertainty for most industry sectors. Manufacturing exports are particularly vulnerable to this risk, with a large share responding negatively to increased volatility.

scholarly journals The Value-Added Effects of Exchange Rates on Global Trade

2021 ◽  
Vol 10 (1) ◽  
pp. 184
Author(s):  
Myoung Shik Choi ◽  
Hun Dae Lee
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Value Added ◽  
Trade Flows ◽  
Intermediate Goods ◽  
Negative Effects ◽  
Policy Objective ◽  
Positive Effects ◽  
The Us ◽  
Bilateral Trade Flows

This study is an investigation of view about the gross, bilateral, and value-added trades adjusting to exchange rate and income within global value chains. Various difference between aggregate and value-added trade flows is introduced. We adopt the traditional trade models and test them using time-series analysis on value-added exports and imports. We find that currency depreciation has negative effects on gross exports in the US and Korea due to intermediate goods imports, but positive effects on value-added exports in Japan and Korea. On the other hand, currency appreciation has negative effects on gross imports in the US, China, Japan and Korea due to intermediate goods exports, but positive effects on value-added imports in Japan. All income effects are positive as we expect. Also, we find the similar effects of exchange rate on bilateral trade flows. On the whole, depreciation has negative effects on gross exports but positive effects on value-added exports while appreciation has negative effects on gross imports but positive effects on value-added imports. With this study, the main contribution is further evidence on the value-added trade analysis. Practical implications reducing uncertainty could be an important policy objective to achieve higher growth.   Received: 23 October 2020 / Accepted: 16 December 2020 / Published: 17 January 2021

Exchange rate sensitivity of Japan’s bilateral trade flows

2004 ◽  
Vol 16 (1) ◽  
pp. 1-15 ◽  
Author(s):  
Mohsen Bahmani-Oskooee ◽  
Gour Gobinda Goswami
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Rate Sensitivity ◽  
Trade Flows ◽  
Bilateral Trade Flows

scholarly journals Real Exchange Rates And U.S. Bilateral Trade

2011 ◽  
Vol 12 (4) ◽  
pp. 138 ◽  
Author(s):  
Abdulhamid Sukar ◽  
Taisier AlDaib Zoubi
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Bilateral Trade ◽  
Real Exchange Rates ◽  
Trade Deficit ◽  
Real Income ◽  
Trade Flows ◽  
Bilateral Trade Flows ◽  
The Relationship ◽  
The U.S

<span>The persistence of the U.S. trade deficit despite the significant depreciation of the dollar in the second half of the 1980s prompted several studies seeking an explanation for this phenomenon. There has been a renewed interest on the exchange rate trade linkage as the U.S. trade deficit reached a record high despite steady depreciation of the dollar in early 1995. This paper presents an empirical analysis of the relationship between real exchange rate and U.S. exports to Canada and Japan. The major finding of this paper is that real income and real exchange rates changes are important determinants of bilateral trade flows.</span>

Sign in / Sign up

Export Citation Format

Share Document