Do inpayments and outpayments respond to exchange rate changes asymmetrically: Evidence from Malaysia

Abstract

Since pass-through of exchange rate changes on import and export prices are asymmetric, we expect a country's inpayments (export earnings) and outpayments (cost of imports) to react to exchange rate changes asymmetrically too. We demonstrate this hypothesis by considering trade between Malaysia and each of her 11 largest trading partners. We find that while the short-run effects of exchange rate changes on Malaysia's inpayments and outpayments are asymmetric with all partners, the long-run asymmetric effects are present in less than half of the partners. The results are partner-specific. JEL Classification: F31

The Korea‐Vietnam trade and the bilateral exchange rate: Asymmetric evidence from commodity trade data

“…This is a discovery that has not been reported in the trade literature on Korea yet. Further, this finding is consistent with the outcomes of Bahmani‐Oskooee and Harvey (2018), Bahmani‐Oskooee and Nasir (2020), Bahmani‐Oskooee and Fariditavana (2020) and Bahmani‐Oskooee and Karamelikli (2021). For example, Bahmani‐Oskooee and Nasir (2020) report that the USD asymmetrically affects the U.S. bilateral trade with the UK.…”

“…To tackle the subject properly, therefore, a recently growing body of research has attempted to include the asymmetry of exchange rates in their empirical models. Examples include—but are not limited to—Bahmani‐Oskooee and Aftab (2017), Bahmani‐Oskooee and Harvey (2018), Bahmani‐Oskooee and Fariditavana (2019), Bahmani‐Oskooee and Arize (2019), Bahmani‐Oskooee and Kanitpong (2019). 1…”

Influence Analysis of Real Exchange Rate Fluctuations on Trade Balance Data Using Feature Important Evaluation Methods

“…[31] investigated the effects of exchange rates using aggregate trade data, while refs. [38,[40][41][42][43][44]46,47] employed bilateral-level trade data to explore the relationship between these variables. In contrast, refs.…”

“…Conversely, to investigate asymmetric effects, studies such as refs. [22,[45][46][47][48] have utilized the NARDL method. Despite these diverse estimation methods, some studies are still unable to establish a clear relationship between exchange rates and trade flows.…”

From the Editor

“…1 Several recent articles in the ITJ have looked at the effect of exchange rates on trade balances in developing countries (Ari, Cergibozan, and Cevik 2019;Bahmani-Oskooee and Harvey 2015;Bahmani-Oskooee and Harvey 2018;Cao-Alvira 2014;Cergibozan and Ari 2018;Soleymani, Chua, and Fatah 2016). When the author breaks the spillovers down by region, growth in Europe positively spills over only in the earlier period, while growth in the United States spills over only in the later period.…”