Bilateral Trade Balance, Exchange Rates, and Income: Evidence from Malaysia

2009 ◽  
Vol 9 (4) ◽  
pp. 1850183 ◽  
Author(s):  
Mohammed B. Yusoff
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Trade Balance ◽  
Bilateral Trade ◽  
The United States ◽  
Bilateral Exchange ◽  
Long Run ◽  
Bilateral Trade Balance ◽  
The Usa

This study attempts to examine the effects of real bilateral exchange rates on Malaysia's bilateral trade balances with its three major trading partners: the USA, Japan, and Singapore. The results suggest that the bilateral trade balance, real exchange rate, domestic and foreign incomes are cointegrated. In the long-run, Malaysia's bilateral trade balances are found to be responsive to the changes of bilateral exchange rate in the cases of the USA and Singapore but irresponsive for Japan. There is a clear evidence of the J-curve effect only in the case of Malaysia's trade balance with the United States. The results also indicate that devaluation tends to be recessionary. The findings suggest that Malaysia could use undervalued exchange rate strategy to improve its trade balances with the United States and Singapore but not Japan.

scholarly journals FENOMENA KURVA J PADA NERACA PERDAGANGAN INDONESIA DENGAN ENAM NEGARA MITRA DAGANG UTAMA

2018 ◽  
Vol 1 (2) ◽  
pp. 10
Author(s):  
Anggraeni Tri Hapsari ◽  
Akhmad Syakir Kurnia
Keyword(s):  
Exchange Rate ◽  
Trade Balance ◽  
Bilateral Trade ◽  
Long Run ◽  
J Curve ◽  
Bilateral Trade Balance ◽  
Trading Partners ◽  
Short Run ◽  
Balance Of Trade ◽  
The Exchange Rate

Whether a J curve phenomenon exists or not on the balance of trade has been an interest for empirical investigation in international economics. The phenomenon is typically associated with the response of the balance of trade to the exchange rate dynamics. Since a country has different trade features with different trading partners, the trade balances adjustment to the exchange rate dynamics should be seen as a head to head phenomenon. This paper investigates the effect of real effective exchange rate (REER) on the bilateral trade balance between Indonesia and its six major trading partners, namely Japan, China, Singapore, United States, South Korea and India on a quarterly basis over the period 1995.1 to 2013.4. The short run and the long run effect of the REER on the balance of trade is expected to be captured using error correction model (ECM) and vector error correction model (VECM). Subsequently, impulse response function is used to trace out the behavior of the bilateral trade balance in response to the REER shock whereas forecast error variance decomposition (FEVD) is used to decay the effect of innovation variables in the system. The result indicates that in the long run a J curve phenomenon appears on the bilateral trade balance between Indonesia and Japan, China, Singapore as well as South Korea. In the short run, a J curve phenomenon is seen on the bilateral trade balance between Indonesia and China as well as Singapore. This confirms that a J curve is a head to head phenomenon that has correlation with the trade features. Thus, the correction mechanism to the trade balance in response to the exchange rate shock (i.e. exchange rate market intervention) should count trade features as a consideration

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 Dynamic Interrelationships between the U.S. Agricultural Trade Balance and the Macroeconomy

2007 ◽  
Vol 39 (3) ◽  
pp. 457-470 ◽  
Author(s):  
Jungho Baek ◽  
Won W. Koo
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Money Supply ◽  
Trade Balance ◽  
The United States ◽  
Agricultural Trade ◽  
Long Run ◽  
Trading Partners ◽  
The Exchange Rate ◽  
The U.S

The effects of the exchange rate and the income and money supply of the United States and its major trading partners on the U.S. agricultural trade balance are examined using an autoregressive distributed lag (ARDL) model. Results suggest that the exchange rate is the key determinant of the short- and long-run behavior of the trade balance. It is also found that the income and money supply in both the United States and the trading partners have significant impacts on U.S. agricultural trade in both the short and long run.

scholarly journals Effects of Bilateral Real Exchange Rate on Sino-Nigeria Trade: An ARDL Cointegration Approach

2018 ◽  
Vol 10 (7) ◽  
pp. 125
Author(s):  
Julio Felippe Bicudo ◽  
Nnanna P. Azu
Keyword(s):  
Exchange Rate ◽  
Bilateral Trade ◽  
Bilateral Exchange ◽  
Long Run ◽  
Rate Fluctuation ◽  
Ardl Approach ◽  
Short Run ◽  
Negative Role ◽  
Balance Of Trade ◽  
Negative Balance

This research is motivated to scrutinise the effects of real bilateral exchange rate fluctuation on China-Nigeria bilateral trade, taking into consideration volatility and third country’s bilateral exchange rate effect to determine their consequences. Due to its robustness in time series analyses, an ARDL approach to co-integration was used to determine the long-and short-runs effects. Both export and import were considered separately. Outcome revealed that Nigeria’s import from China responds negatively to real bilateral exchange rate increase just as it does to its volatility. Her export to China reacts positively on both front, most especially in the short-run. Japan was integrated as a third country in this research due to her competing presence in Nigerian market. Third country’s real bilateral exchange rate play prominent but negative role in China-Nigeria trade, and is mostly effective in the long-run. With the absolute value of the co-efficient of real bilateral exchange rate greater than one, depreciating the Naira against the Renminbi will tend to ameliorate the negative balance of trade Nigeria has with China. Finally, democratic regime was found to be very essential in enhancing international business.

scholarly journals Real exchange rate and trade balance in Turkey: Evidence from heterogeneous panel data

2020 ◽  
pp. 7-7
Author(s):  
Ahmet Kaya
Keyword(s):  
Exchange Rate ◽  
Panel Data ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
Bilateral Trade ◽  
Income Elasticity ◽  
Balance Model ◽  
Common Correlated Effects ◽  
The Usa ◽  
Heterogeneous Panel

In this study, the effect of real exchange rate on bilateral trade balance between Turkey and its 25 main trade partners is investigated for the period of 1996 - 2015 with heterogeneous panel data techniques. Trade balance model is estimated by using Mean Group (MG) estimator, which allows parameter heterogeneity, Common Correlated Effects Mean Group (CCEMG), and Augmented Mean Group (AMG) estimators, which both allow cross-section dependency and heterogeneity. Results indicate that the real exchange rate elasticity of the trade balance ranges between -0.40 and -0.45 and Marshall-Lerner (ML) condition is valid for Turkey. According to the results, the foreign income elasticity of trade balance ranges between 1.54 and 2.84, while for domestic income elasticity, it is found between -0.75 and -1.38. Country-specific results show that ML condition is valid for the USA, Belgium, Spain, Switzerland, Romania, and Russia at the bilateral level according to both CCEMG and AMG estimators.

Revisiting the tourism-economic growth nexus: evidence from the United States

2019 ◽  
Vol 31 (9) ◽  
pp. 3779-3798 ◽  
Author(s):  
David N. Aratuo ◽  
Xiaoli L. Etienne ◽  
Tesfa Gebremedhin ◽  
David M. Fryson
Keyword(s):  
Economic Growth ◽  
Exchange Rates ◽  
The United States ◽  
Impulse Response Functions ◽  
Causality Test ◽  
Content Type ◽  
Long Run ◽  
The Usa ◽  
State And Local ◽  
Exchange Rate Shocks

Purpose The purpose of this study is to investigate the causal linkages between tourism and economic growth in the USA and determine how they respond to shocks in the system. Design/methodology/approach The study uses a variety of time series procedures, including the bounds test, Granger causality test, impulse response functions and generalized variance decomposition to analyze the relationship between monthly tourist arrivals (TA) to the USA, real gross domestic product (GDP) and real effective exchange rates. Findings Results suggest that GDP Granger causes TA in the USA in the long run, indicating the economy-driven tourism growth hypothesis. Additionally, a shock to GDP generates a positive and significant effect on TA that persists in the long-run, while exchange rate shocks only have a significant effect in the first six months. Research limitations/implications Different tourism sectors may exert different degrees of influence on the economy. The use of aggregate data on TA in the analysis assumes homogeneity in the industry, thus, only represents the average relationship between tourism and GDP. Practical implications This study provides insight that shapes the investment, marketing, sustainability decisions of the public and private sectors aim at increasing tourist flows to drive economic development at the national, state and local levels. Originality/value Though several studies have examined the factors influencing the international tourist demand of the USA, this is the first to investigate the causal relationships between tourism, GDP and exchange rates for the USA. It is also the first in the US tourism literature to account for the nature of interactions between the three variables because of innovations in the system.

scholarly journals Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture

2009 ◽  
Vol 38 (2) ◽  
pp. 213-228 ◽  
Author(s):  
Jungho Baek ◽  
Won W. Koo ◽  
Kranti Mulik
Keyword(s):  
United States ◽  
Exchange Rate ◽  
Bilateral Trade ◽  
Time Series Data ◽  
The United States ◽  
Agricultural Trade ◽  
Agricultural Products ◽  
Series Data ◽  
J Curve ◽  
Trading Partners

This study examines the dynamic effects of changes in exchange rates on bilateral trade of agricultural products between the United States and its 15 major trading partners. Special attention is paid to investigate whether or not the J-curve hypothesis holds for U.S. agricultural trade. For this purpose, an autoregressive distributed lag (ARDL) approach to cointegration is applied to quarterly time-series data from 1989 and 2007. Results show that the exchange rate plays a crucial role in determining the short- and long-run behavior of U.S. agricultural trade. However, we find little evidence of the J-curve phenomenon for U.S. agricultural products with the United States’ major trading partners.

Asymmetric Exchange Rate Effects on Cross-Border Freight Flows between the United States and Canada

2020 ◽  
Vol 2674 (4) ◽  
pp. 348-361
Author(s):  
Junwook Chi
Keyword(s):  
Exchange Rate ◽  
Linear Models ◽  
Bilateral Trade ◽  
Nonlinear Models ◽  
Exchange Rate Volatility ◽  
The United States ◽  
Trade Flows ◽  
Asymmetric Effects ◽  
Cross Border ◽  
Long Run

This paper investigates possible asymmetric influences of the exchange rate on cross-border freight flows between the U.S.A. and Canada. Linear and nonlinear autoregressive distributed lag models are used to test for the existence of long-run asymmetric effects of 1) currency appreciation and depreciation and 2) exchange rate volatility changes on trade flows by truck, rail, air, vessel, and pipeline. This paper provides evidence that both currency value and exchange rate volatility affect the U.S.–Canada freight flows in an asymmetric manner. The long-run results of the nonlinear models show that exchange rate is found to be significantly associated with the bilateral trade flows between the U.S.A. and Canada. Exchange rate volatility tends to be significantly associated with trade flows in the nonlinear models, while its effects are insignificant in most cases in the linear models. These findings suggest that the conventional linear specification may mislead the asymmetric effects of exchange rate uncertainty on cross-border freight flows. It is also found that exchange rate sensitivities of U.S.–Canada trade flows by transport mode can differ significantly from those of aggregate trade flows. The information derived from disaggregate trade data can be useful for traders and shippers to develop a long-term strategic plan for infrastructure investment and service expansion.

Domestic Exchange Rates and Regional Economic Growth in the United States, 1899–1908: Evidence from Cointegration Analysis

1998 ◽  
Vol 58 (4) ◽  
pp. 1010-1026 ◽  
Author(s):  
Ronnie J. Phillips ◽  
Harvey Cutler
Keyword(s):  
United States ◽  
Economic Growth ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Federal Reserve ◽  
Growth Rates ◽  
The United States ◽  
Cointegration Analysis ◽  
Regional Economic Growth ◽  
Exchange Rate Fluctuations

This article examines one feature of the pre—Federal Reserve financial system that has not been widely researched: the market for bank drafts (the “domestic exchanges”). Though the exchanges existed for nearly a century, critics argued that exchange rate fluctuations exacerbated financial panics. We find, using cointegration analysis over the period from 1899 to 1908, that differences in growth rates across regions caused predictable movements in rates. We conclude that the exchanges promoted efficiency in the payments system. This supports the view that the private sector might have developed a unified national system had the Fed not abolished the exchanges.

scholarly journals US-China trade conflict: causes and consequences

2020 ◽  
Keyword(s):  
United States ◽  
Foreign Trade ◽  
Regression Models ◽  
Bilateral Trade ◽  
Negative Impact ◽  
The United States ◽  
Economic Relations ◽  
Stage Of Development ◽  
The Us ◽  
The Usa

At the present stage of development of international economic relations special attention is paid to the study of the relations between the countries that are the world leaders in terms of GDP and foreign trade – the USA and China. This is due to the fact that in recent years the US have introduced a number of measures to counteract the growth of Chinese exports, which has led to backlash from China. The subject of the study is the foreign trade relations of the USA and China. The goal is to analyze the influence of protectionist measures applied by the US and China on the development of their foreign economic relations. The following objectives are set: to determine the level of economic interdependence of the USA and the PRC, to investigate their impact on mutual trade flows and to analyze the dynamics of bilateral trade of countries under restrictive measures. The following methods are: comparative analysis, systematization and generalization, construction of regression models. The results of the analysis revealed that the US and PRC current accounts show reverse dynamics: the United States demonstrates stable deficit, while China has had surplus for many years. Moreover, the structures of the current accounts do differ a lot as well: the US is totally services-oriented country, whereas China is a major exporter of goods. It can be observed that both countries have experienced a recession of foreign economic activity since 2018, as far as their current account balances decreased substantially, which is likely to be the consequence of tariff barriers imposed by the US and PRC. Furthermore, due to trade confrontation, bilateral trade between these countries declines significantly as well, so that now China and the United States are forced to look for new export markets. The results of the regression models allow concluding that import from China is indeed having a negative impact on US exports, which has led to the US restrictions on imports from China. However, the introduction of mutual restrictions did not lead to an improvement of the US foreign trade.

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