Exchange-rate volatility in Latin America and its impact on foreign trade

Arize, Augustine C.; Osang, Thomas; Slottje, Daniel J.

doi:10.1016/j.iref.2006.01.004

Cited by 103 publications

(67 citation statements)

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“…Kandilov (2008) finds that the exchange rate volatility had a negative impact on trade flows and the impact was larger in the agricultural sector and even worse in the case of developing countries. Similarly, Thursby and Thursby (1987), Pick (1990), Chowdhury (1993), Arize et al (2000Arize et al ( , 2008, Doganlar (2002), Chit et al (2010), Zhao (2010) and Kafle and Kennedy (2012) find that the exchange rate volatility has had a negative impact on trade flows. On the other hand, Klein (1990), Pick (1990), Broll and Eckwert (1999), Awokuse and Yuan (2006), Choudhry (2008) and Jozsef (2011) are some of the researchers who report a positive impact of the exchange rate volatility on agricultural and the total trade flows.…”

Section: Literature Reviewmentioning

confidence: 98%

“…A 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.…”

Section: Literature Reviewmentioning

confidence: 99%

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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: 98%

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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“…When the exchange rate movements are not fully anticipated, an increase in exchange rate volatility leads risk-averse agents to reduce their international trading activities. Similarly, Arize et al (2008) examine eight Latin American countries and find that that there is a negative and statistically significant long-run relationship in all cases.…”

Section: Literature Reviewmentioning

confidence: 99%

Exchange rate volatility and international trade: International evidence from the MINT countries

Masatci²,

2016

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This paper examines the effect of exchange rate volatility on international trade activities for Mexico, Indonesia, Nigeria, and Turkey. We use volatility predicted from GARCH models for both nominal and real effective exchange rate data. To detect the long term relationship we use the autoregressive distributed lag (ARDL) bound testing approach; while for the short term effects, Granger causality models are employed. The results show that, in long term, there is no linkage between exchange rate volatility and international trade activities except for Turkey and even in this case the magnitude of the effect of volatility is quite small. In the short term, however, a significant causal relationship from volatility to import/export demand is detected for Indonesia and Mexico. In the case of Nigeria unidirectional causality from export demand to volatility is found, while for Turkey no causality between volatility and import/export demand is detected.

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“…Ao utilizar o modelo gravitacional e duas medidas de volatilidade cambial, os autores concluíram que a redução na instabilidade cambial, o crescimento da renda e a redução de tarifas afetam positivamente o comércio bilateral no Mercosul. Arize et al (2008) verificaram o efeito da volatilidade cambial sobre os fluxos de exportação de oito países emergentes da América Latina no período 1973 a 2004, tendo utilizado diferentes técnicas de cointegração para captar o efeito. Entre os resultados encontrados, constatou-se que o aumento da volatilidade da taxa de câmbio real efetiva exerceu efeito negativo significativo sobre a demanda de exportação em cada um dos países analisados, no curto e no longo prazo.…”

Section: Introductionunclassified

Volatilidade Da Taxa De Câmbio E Seus Efeitos Sobre O Fluxo De Comércio Dos Países Da América Do Sul

Silva

Freitas²,

Mattos³

2016

Rev. econ. contemp.

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RESUMO: Diante da importância da taxa de câmbio no comércio externo, considerando que suas flutuações podem modificar a escala de preços entre os países, a presente pesquisa buscou identificar o impacto da volatilidade da taxa de câmbio real bilateral sobre o fluxo de comércio entre os países da América do Sul. Para tal, foi estimado um modelo gravitacional utilizando uma amostra de nove países, entre 1998 e 2012. O método utilizado na estimação foi o modelo Poisson-Pseudo Maximum Likehood (PPML). Os resultados mostraram que a instabilidade cambial é prejudicial à relação de comércio entre países da América do Sul, já que maior incerteza cambial leva os agentes econômicos, a longo prazo, a reduzir suas atividades no comércio internacional, dada maior exposição ao risco. Outro resultado importante foi a constatação de que os países membros do Mercosul, de fato, têm o comércio favorecido diante das vantagens oferecidas pelo bloco, como a redução de tarifas comerciais. Quanto à variável utilizada para captar o efeito da crise do

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Exchange-rate volatility in Latin America and its impact on foreign trade

Cited by 103 publications

References 50 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

Exchange rate volatility and international trade: International evidence from the MINT countries

Volatilidade Da Taxa De Câmbio E Seus Efeitos Sobre O Fluxo De Comércio Dos Países Da América Do Sul

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