scholarly journals Aggregation, asymmetry, and common factors for Bangladesh’s exchange rate–trade balance relation

2021 ◽  
Author(s):  
Rabeya Khatoon ◽  
Md Emran Hasan ◽  
Md Wahid Ferdous Ibon ◽  
Shahidul Islam ◽  
Jeenat Mehareen ◽  
...  
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Trade Balance ◽  
Time Series Data ◽  
Government Support ◽  
Series Data ◽  
Aggregate Analysis ◽  
Long Run ◽  
J Curve ◽  
Rate Relationship

AbstractWe present an application of the recent CS-ARDL methodology in the context of a country’s trade balance–exchange rate relationship. The trade balance is expected to deteriorate first before improving in response to currency depreciation and vice versa, widely known as the J-curve effect satisfying the Marshall–Lerner condition in the long run. Combining bilateral and aggregate analysis in one setting by constructing specific panel data with one reference country, we find that aggregate analysis is sensitive to our allowance for heterogeneity. Estimates using the aggregate time series data show evidence favoring the J-curve relation, whereas the aggregate analysis resulting from the panel time series data shows that currency appreciation improves trade balance in Bangladesh in the long run, which goes against the Marshall–Lerner condition. With the reference of the existing commodity-level literature, we argue that this atypical scenario lines with the realities of a ‘small’ economy like Bangladesh, where her exporters attempt to maintain their market share with some government support. The study provides essential policy suggestions by identifying the significant contributors to Bangladesh’s trade balance–exchange rate relationship: China, Japan, and Singapore.

scholarly journals Linear and Nonlinear Dynamics of the Turkish Trade Balance

2016 ◽  
Vol 8 (2) ◽  
pp. 70 ◽  
Author(s):  
Huseyin Karamelikli
Keyword(s):  
United States ◽  
United Kingdom ◽  
Exchange Rate ◽  
Trade Balance ◽  
Bilateral Trade ◽  
Time Series Data ◽  
Series Data ◽  
Long Run ◽  
J Curve ◽  
Short Run

<p>This study empirically analyses bilateral trade of Turkey with her main trade partners using monthly time series data over the period of 2000 to 2015. J-curve theory and short-run dynamics of bilateral trade is tested by linear ARDL and Non-linear ARDL approaches. The empirical results indicate that there is no J-curve effect during short-run for United States and for France; it symmetrically exists to Germany and asymmetrically to United Kingdom. Also long-run relationship between exchange rate and trade balance has mixed results. Asymmetric long-run relationship between exchange rate and trade balance for United States exists where it is symmetrically most appropriate for Germany. In the other hand this study failed to verify any long-run relationship between exchange rate and trade balance for France and for United Kingdom.</p>

scholarly journals IMPACT OF TRADE ON ECONOMIC GROWTH OF PAKISTAN: AN ARDL TO CO-INTEGRATION APPROACH

2016 ◽  
Vol 55 (2) ◽  
pp. 47-58
Author(s):  
Nooreen Mujahid ◽  
Azeema Begum ◽  
Muhammad Noman
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Exchange Rate ◽  
Time Series Data ◽  
Policy Option ◽  
Stationary Time Series ◽  
Series Data ◽  
Long Run ◽  
Import And Export ◽  
The Relationship

This paper explores the relationship between export growth and economic growth in the case of Pakistan by employing time series data for the period 1971- 2013. This study has incorporated variables like GDP (Gross Domestic Product) exports, imports and Foreign Direct Investment (FDI). We have applied ARDL to co-integration and Error Correction Model (ECM). The study provides the evidence of stationary time series variables, the existence of the long - run relationship between them, and the result of ECM revealed short rum equilibrium adjustment. Pakistan has many options for enhancing the export of the country. There is a dire need to minimize trade barriers and restrictions such as import and export quotas. Government of Pakistan had introduced Structural Reforms for liberalization, privatization and de-regulation which will actually shifted the trend of trade at a significant level in the end of 1980s. Low levels of interest rate can help exportable industries in which investments are needed to promote and enhance the exports. Stable exchange rate is the first and the best policy option for increasing the export and managing the imports. There is a cause and effect relationship between exchange rate and FDI. Pakistan has to immediately find the policies and processes that support logistics and facilitates trade.

scholarly journals An ECM Approach for Long Run Relationship Between Real Exchange Rate and Output Growth: Evidence from Bangladesh

2015 ◽  
Vol 63 (2) ◽  
pp. 105-110 ◽  
Author(s):  
Khnd Md Mostafa Kamal
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Time Series Data ◽  
Output Growth ◽  
Series Data ◽  
Data Series ◽  
Currency Exchange ◽  
Long Run ◽  
Short Run

Currency exchange rate is an important aspect in modern economy which indicates the strength of domestic currency with respect to international currency. This study uses 42 years’ (1972 to 2013) time series data for Bangladesh in order to empirically determine whether the real exchange rate has significant impact on output growth for Bangladesh by using error correction model (ECM).The time series econometrics properties of the data series have been thoroughly investigated to apply ECM approach. The empirical evidence suggests mixed results; in the short run low exchange rate has positive significant effect while in the long run output growth is positively affected high exchange rate pass through.Dhaka Univ. J. Sci. 63(2):105-110, 2015 (July)

Monetary Policy and Nigeria's Trade Balance, 1980-2018

2021 ◽  
Vol 10 (1) ◽  
pp. 129-138
Author(s):  
Musa Abdullahi Sakanko ◽  
Kanang Amos Akims
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Interest Rates ◽  
Trade Balance ◽  
Time Series Data ◽  
Policy Instruments ◽  
Flexible Exchange Rate ◽  
Series Data ◽  
Distributed Lag ◽  
Long Run

Several countries have integrated monetary easement into their foreign policy to faucet the gains from trade thereby, assuring that market forces determine monetary policy instruments such as interest rate and exchange rate. It is on this note and this paper empirically evaluate the effect of monetary policy on Nigeria's trade balance using the Autoregressive Distributed Lag Model on the time series data spanning from 1980 to 2018. The findings reveal that monetary policy tools of real interest and effective exchange rate have a long-run co-integration relationship and significant adverse effects on Nigeria's trade balance both in the short-run and long-run. Thus, the paper concludes that monetary policy is a veritable tool through which Nigeria can maintain a favorable trade balance. Therefore, policymakers should step on measures that will maintain low-interest rates to sustain a flexible exchange rate and remove all rigidities associated with the international payment system.JEL Classification: C22, E52, F13How to Cite:Sakanko, M. A., & Akims, K. A. (2021). Monetary Policy and Nigeria’s Trade Balance, 1980-2018. Signifikan: Jurnal Ilmu Ekonomi, 10(1), 129-138. https://doi.org/10.15408/sjie.v10i1.18132.

Impact of Globalization on Industrial Development in Vietnam: Evidence from Time Series Analysis

2019 ◽  
pp. 5-22
Author(s):  
Van Nguyen Thi Cam
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Direct Investment ◽  
Industrial Development ◽  
Time Series Data ◽  
Industrial Sector ◽  
Series Data ◽  
Long Run ◽  
Short Run ◽  
Balance Of Trade

This study aims at investigating the impact of globalization on industrial development in Vietnam. Empirical analysis is done by using time series data for the period from 1995 to 2015. The paper tested the stationary, cointegration of time series data and utilized error correction modeling technique to determine the short-term relationships among industry value added, globalization, foreign direct investment, balance of trade, exchange rate and reserves variables. The results show that globalization, measured by the KOF index, promotes industrial development and that Vietnam has gained from integrating into the global economy. The overall index of globalization has positively and significantly impacted on the industrial development in Vietnam in the short run as well as in the long run. The results also indicate that foreign direct investment has had a massive effect on the development of the Vietnamese industrial sector in the long run. The study further reveals that balance of trade has affected industrial development positively in the long run. Moreover, the exchange rate was found to be positively influential toward industrial development in the long run but it has had a negative effect on the industrial sector in the short run. In addition, reserves have negatively affected industrial performance in the long run but have had an insignificant impact in the short run.

scholarly journals Another Look at Devaluation and the Trade Balance in China

2020 ◽  
Vol 12 (3) ◽  
pp. 321-329
Author(s):  
Ethan McGee ◽  
Kamal P Upadhyaya ◽  
Rabindra N Bhandari
Keyword(s):  
Time Series ◽  
Money Supply ◽  
Trade Balance ◽  
Time Series Data ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
Correction Model ◽  
J Curve ◽  
Effective Exchange ◽  
Effective Exchange Rate

This paper estimates the effect of Chinese Yuan devaluation on the trade balance of China.  For that a regression equation is developed in which domestic income, foreign income, domestic money supply, foreign money supply and real effective exchange rate are used as explanatory variable with trade balance as the dependent variable. In order to test the J-curve phenomenon the lagged values of exchange rata are also included.  Quarterly time series data from 1999 to 2016 are used.  Before estimating the model the time series properties of the data are diagnosed and an error correction model is developed and estimated.  The estimated results show that the contemporaneous effect of devaluation is positive, but the total effect is insignificant.  A J-curve pattern of adjustment of the trade balance is also detected.

scholarly journals Does Exchange Rate Have Asymmetric Impact on Trade Balance? Fresh Insights from Combined Cointegration

2020 ◽  
Vol 15 (1) ◽  
pp. 259-269
Author(s):  
Solomon Prince Nathaniel
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Time Series Data ◽  
Structural Break ◽  
Sustainable Growth ◽  
Series Data ◽  
Wald Tests ◽  
J Curve ◽  
Asymmetric Impact ◽  
Bounds Test

AbstractThe study examines the asymmetric impact of exchange rate on the trade balance in Nigeria relying of time series data that spans 1960-2016. The Non-linear ARDL bounds test and the Bayer and Hanck (2013) test established a cointegrating relationship among the variables after accounting for structural break in the series. The Block Exogeneity Wald Tests affirmed the bidirectional causality between the variables. Findings establish the asymmetric impact of exchange rate on the trade balance in Nigeria, but unable to confirm the existence of the J-curve Phenomenon. This reveals that the devaluation of the Naira may not be a viable decision if the intention is to curb the persistent deficit in the country’s trade balance. Policies that could help curtail these deficits and enhance sustainable growth were suggested.

Faktor-Faktor Yang Mempengaruhi Nilai Tukar Dollar Amerika Serikat Terhadap Rupiah Tahun 2000–2013

2017 ◽  
Vol 1 (2) ◽  
pp. 177-191
Author(s):  
Rizki Rahma Kusumadewi ◽  
Wahyu Widayat
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Money Supply ◽  
Time Series Data ◽  
The United States ◽  
Economic Conditions ◽  
Series Data ◽  
Arch Model ◽  
United States Dollar ◽  
The Exchange Rate

Exchange rate is one tool to measure a country’s economic conditions. The growth of a stable currency value indicates that the country has a relatively good economic conditions or stable. This study has the purpose to analyze the factors that affect the exchange rate of the Indonesian Rupiah against the United States Dollar in the period of 2000-2013. The data used in this study is a secondary data which are time series data, made up of exports, imports, inflation, the BI rate, Gross Domestic Product (GDP), and the money supply (M1) in the quarter base, from first quarter on 2000 to fourth quarter on 2013. Regression model time series data used the ARCH-GARCH with ARCH model selection indicates that the variables that significantly influence the exchange rate are exports, inflation, the central bank rate and the money supply (M1). Whereas import and GDP did not give any influence.

Impact of exchange rate and oil price on the yield of sovereign bond and sukuk: Evidence from Malaysian capital market

2017 ◽  
Vol 5 (4) ◽  
pp. 27
Author(s):  
Huda Arshad ◽  
Ruhaini Muda ◽  
Ismah Osman
Keyword(s):  
Exchange Rate ◽  
Capital Market ◽  
Time Series Data ◽  
Oil Prices ◽  
Oil Price ◽  
Series Data ◽  
Sovereign Bond ◽  
Long Run ◽  
Short Run ◽  
The Impact

This study analyses the impact of exchange rate and oil prices on the yield of sovereign bond and sukuk for Malaysian capital market. This study aims to ascertain the effect of weakening Malaysian Ringgit and declining of crude oil price on the fixed income investors in the emerging capital market. This study utilises daily time series data of Malaysian exchange rate, oil price and the yield of Malaysian sovereign bond and sukuk from year 2006 until 2015. The findings show that the weakening of exchange rate and oil prices contribute different impacts in the short and long run. In the short run, the exchange rate and oil prices does not have a direct relation with the yield of sovereign bond and sukuk. However, in the long run, the result reveals that there is a significant relationship between exchange rate and oil prices on the yield of sovereign bond and sukuk. It is evident that only a unidirectional causality relation is present between exchange rate and oil price towards selected yield of Malaysian sovereign bond and sukuk. This study provides numerical and empirical insights on issues relating to capital market that supports public authorities and private institutions on their decision and policymaking process.

scholarly journals Currency Depreciation, Trade Balance and Intra-Industry Trade Interactions in Turkey’s OECD Trade

2016 ◽  
Vol 8 (4) ◽  
pp. 8 ◽  
Author(s):  
Mehmet Demiral
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Real Effective Exchange Rate ◽  
Series Data ◽  
Adjustment Process ◽  
Industry Trade ◽  
Long Run ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate

<p>This study re-examines the determinants of Turkey’s trade balance in its manufactures trade with 33 OECD-member countries for the short-run and the long-run. Unlike other studies, in the relationships we also control the moderating effects of the availability of import substitutes proxied by intra-industry trade. We analyze quarterly aggregated time-series data of the period spanning from 1998.QI to 2015.QIII, following the autoregressive distributed lag (ARDL) bounds testing approach to the cointegration and the error correction modeling. Estimation results reveal that real effective exchange rate, together with domestic and foreign incomes are still among the core determinants of Turkey’s trade balance in the manufacturing sectors. There is no significant impact of domestic final oil prices that also include all the taxes on gasoline. The trade balance depends on domestic income negatively and the aggregated income of the OECD countries positively. The finding that real depreciation of Turkish lira against to those of Turkey’s OECD trade partners improves trade balance in both the short-run and the long-run, indicates no evidence of J-curve adjustment process. Unsurprisingly, the intra-industry trade seems to be an important factor that moderates the elasticities of trade balance to its determinants, especially to real effective exchange rate and domestic income. Overall results underline the importance of import-substitution capability besides the export-oriented production to ease the longstanding large trade deficits for Turkey.</p><strong></strong>

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