2020
DOI: 10.1108/itpd-08-2020-0076
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Effect of exchange rate uncertainty on bilateral trade performance in SAARC countries: a gravity model analysis

Abstract: PurposeExchange rate uncertainty leads to an indecisive environment for imports and exports that would condense international trade, foreign direct investment, trade earnings, trade volumes, economic growth and welfare. This study aims to examine, empirically, the effect of exchange rate uncertainty on bilateral trade performance, focusing on eight SAARC member economies using the popular modified gravity model of trade.Design/methodology/approachThe paper includes eight SAARC members – Afghanistan, Bangladesh… Show more

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Cited by 12 publications
(9 citation statements)
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“…The gravity model has an ability to overestimate the influence of integration on the trade volume [27]. Furthermore, macroeconomic questions related to net money flows and, for instance, the implications of currency unions, have been resolved [20,28]. Disaggregated trading movements have also been used, such as trade in agricultural products [29], iron trade [30], and trade in forest goods [31].…”
Section: Introductionmentioning
confidence: 99%
“…The gravity model has an ability to overestimate the influence of integration on the trade volume [27]. Furthermore, macroeconomic questions related to net money flows and, for instance, the implications of currency unions, have been resolved [20,28]. Disaggregated trading movements have also been used, such as trade in agricultural products [29], iron trade [30], and trade in forest goods [31].…”
Section: Introductionmentioning
confidence: 99%
“…Generally, the gravity model assumes that bilateral trade is proportional to the product of the trading partner's economic masses, proxied by GDP, and inversely proportional to the geographic distance between them. However, it is important to control for other trade determining factors such as population and exchange rate [33,34]. In order to control for country heterogeneity, we make use of partner fixed effects.…”
Section: Methods and Datamentioning
confidence: 99%
“…Secara singkat dapat dijelaskan bahwa jika risiko nilai tukar meningkat, hal tersebut akan membuat volume perdagangan menjadi menurun apabila pedagang cenderung menghindari risiko. Sejalan dengan pernyataan tersebut, penelitian yang dilakukan oleh Banik & Roy (2021) menyatakan bahwa terdapat pengaruh negatif dan signifikan mengenai hubungan volatilitas nilai tukar dengan kinerja perdagangan pada negara-negara di kawasan Asia Selatan yang tergabung dalam kerjasama SAARC. Adanya volatilitas yang ekstrim berimplikasi pada berkurangnya arus perdagangan di antara negara anggota SAARC.…”
Section: Grafik 2 Volatilitas Nilai Tukarunclassified
“…Efek campuran dari adanya volatilitas tersebut sejalan dengan penelitian yang pernah dilakukan pada negara-negara di kawasan Asia Selatan yang tergabung dalam kerja sama SAARC. Dalam penelitian yang dilakukan oleh Banik & Roy (2021) ditemukan bahwa terdapat pengaruh negatif dan signifikan antara volatilitas nilai tukar dengan kinerja perdagangan, hal tersebut menyiratkan bahwa dengan adanya volatilitas yang ekstrim maka akan mengurangi arus perdagangan di antara negara anggota SAARC.…”
Section: Tinjauan Literaturunclassified