does exchange rate variability depress trade flows evidence from error correction models this paper examines the impact of exchange rate volatility on the trade flows of the g 7 countries in the context of a multivariate error correction model the error correction models do not show any sign of parameter instability the results indicate that the exchange rate volatility has a significant negative impact on the volume of exports in each of the g 7 countries assuming market participants are risk averse these results imply that exchange rate uncertainty causes them to reduce their activities change prices or shift sources of demand and supply in order to minimize their exposure to the effects of exchange rate volatility this in turn can change the distribution of output across many sectors in these countries it is quite possible that the surprisingly weak relationship between trade flows and exchange rate volatility reported in several previous studies are due to insufficient attention to the stochastic properties of the relevant time series copyright 1993 by mit press

exchange rate pass through in u s manufacturing industries this paper studies exchange rate pass through in u s manufacturing industries and its cross sectional variation through an adapted dixit stiglitz model of product differentiation the paper predicts that pass through is positively related to the degree of product differentiation and inversely related to the elasticity of marginal cost with respect to output empirical estimates of the pass through elasticities show that pass through is incomplete and varies across industries the degree of pass through is found to be positively correlated to different proxies for product differentiation and negatively to a proxy for the elasticity of marginal cost

causality between fdi and financial market development evidence from emerging markets this paper studies the causal relationship between foreign direct investment fdi and financial market development fmd using panel data from emerging markets most studies of the relationship between fdi and fmd have focused on the role of fmd in the link between fdi and economic growth with no deep understanding of direct causality between fdi and fmd especially in emerging markets where financial markets are in the development stage we document bidirectional causality between fdi and stock market development indicators for banking sector development indicators the relationship is ambiguous and inconclusive care is therefore needed when analysing the relationship between fmd and fdi as results may depend on whether the fmd variables used to evaluate causality are stock market or banking sector development indicators

absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth abstract this study examines the effects of foreign direct investment fdi and equity foreign portfolio investment efpi on economic growth using data on 80 countries from 1979 through 1998 the results largely suggest that lagged fdi and efpi do not have direct unmitigated positive effects on growth but some data are consistent with the view that the effects of fdi and efpi are contingent on the absorptive capacity of host countries with particular respect to financial or institutional development moreover extreme bound analysis eba of significant results indicates that the estimates are robust compared to other empirical studies on growth

the determinants of international remittances in developing countries summary what causes developing countries to receive different levels of international remittances this paper addresses this question by using new data on such variables as the skill composition of migrants poverty and interest and exchange rates to examine the determinants of remittances the paper finds that the skill composition of migrants does matter in remittance determination countries which export a larger share of high skilled educated migrants receive less per capita remittances than countries which export a larger proportion of low skilled migrants it also finds that the level of poverty in a labor sending country does not have a positive impact on the level of remittances received

u s bilateral trade flows and exchange risk during the floating period abstract this paper tests for real exchange rate risk effects on u s bilateral trade flows during the floating period using several new as well as previously used risk measures significant negative effects occur in five of six u s import flows and in two of six u s export flows with one export flow showing a significant positive effect these results are consistent with several previous findings for aggregate u s trade two risk measures using the forward exchange rate and assuming a time varying risk premium provide marginally more significant results than the others

the interaction of foreign exchange and market power effects on german domestic prices this paper illustrates the importance of international influences on domestic markets a model is presented in which changes in a country s terms of trade pass through to industrial prices in varying degrees depending on import penetration and seller concentration empirical results suggest that the 8 4 percent decline in the real external value of the deutsche mark from 1977 to 1983 allowed upward movement of about 2 percent in domestic producer prices of traded goods relative to the gnp price deflator increased market concentration led to a reduced effect while increased import penetration led to some increase in the exchange rate passthrough standard industrial organization models stress the impact of market power and entry conditions on economic performance with particular interest in price effects at the industry level greater concentration is expected to lead to higher prices ceteris paribus while greater ease in entry or a larger competitive fringe implies lower prices the international economics literature indicates that in the absence of trade barriers transactions and transportation costs and market power foreign exchange rate changes will be fully passed through to import and export prices implying that domestic prices of traded goods for an appreciating currency will be adjusted downward by the full amount of the exchange rate change the dramatic changes in exchange rates since the early 1970s provided exporters with new opportunities to enter markets of nations that had a strong currency west germany has been regarded as one such country this paper investigates the effect of exchange rate movements on particular german industrial prices i test to see whether the prominence of imports

tastes and technology in a two country model of the business cycle explaining international trade on international financial markets allows people to insure country specific risk and smooth consumption intertemporally equilibrium models of business cycles with trade on global financial markets typically yield international consumption correlations near one and excessive volatility of investment the authors incorporate nontraded goods in the model and find that the implications for aggregate consumption investment and the trade balance are consistent with business cycle properties of industrialized countries however the model driven by technology shocks alone yields counterfactual implications for comovements between consumption and prices at the sectoral level taste shocks produce price quantity relationships more consistent with the data copyright 1995 by american economic association

exchange rate volatility and aggregate export growth in bangladesh the long and short run determinants of bangladeshi export growth are examined these are modelled as depending on world trade volume bangladeshi and world export prices and exchange rate volatility several techniques are used to estimate and test hypotheses about the cointegration space of these variables we find that there are two plausible restricted cointegrating vectors one appears to be an export demand while the other is suggestive of an export supply these are then imposed on an error correction model estimates suggest that in the long run bangladeshi export growth is driven by the volume of world trade and is negatively and inelastically related to the volatility of bangladeshi exchange rates once these long run effects are accounted for it is found that none of the variables significantly explains any short run changes in export growth

market structure and the empirical specification of profit margins we present evidence from a panel of u k manufacturing industries to test the sensitivity of the margins concentration relationship to specification changes in the dependent variable instrumental variable estimates demonstrate that a positive association between profit margins and concentration is contingent on how the margin is formulated

exchange rate volatility international trade and resource allocation a perspective on recent research abstract recent research on the effects of exchange rate volatility is discussed and directions for future research are explored the need to pay more attention to the effects of diversification and firms characteristic is emphasized it is suggested that while international risk has risen substantially since floating the differential between international and domestic risk may not this could help explain the failure of international trade to fall drastically and suggests that exchange rate volatility has been more a reflection than an independent cause of underlying instability

determinants of international trade flows this paper models and estimates import demand and demand for export functions for 19 industrial countries although primary emphasis is placed on the period of generalized floating exchange rates 1972 through 1980 estimates are also provided for the fixed exchange rate years 1957 1970 thus making possible a comparison between the two eras aside from the conventional income and price variables the paper assesses the effect of variations in the exchange rate and in the expected exchange rate on real trade flows additionally it estimates an unrestricted lag structure of the effect of price and exchange rate variations on imports

finance and income inequality in kazakhstan evidence since transition with policy suggestions abstractkazakhstan gained independence in 1990 and has undergone significant changes in economic social and trade conditions since then we analyse the effects of financial development on income inequality in kazakhstan incorporating economic growth foreign investment education and the role of democracy as the drivers we establish that income inequality in kazakhstan is impaired by financial development in summary we send three messages for policy purposes first strengthening financial sector is necessary to close the gap between haves and have nots second attracting fdi beyond the hydrocarbon sector is necessary to alleviate inequality finally adaptation of education system to the new social and economic environment would help in improving income distribution

does remittance fuel labour productivity in bangladesh the application of an asymmetric non linear ardl approach abstractbangladesh a labour abundant country is finally learning to reap gains from her labour abundance the historical under optimized capital labour ratio of bangladesh is slowly moving towards its optimum as the migration of its labour force and consequent inflow of remittance strategically converts its abundant labour into capital though the fear that remittance as an alternative source of earning may result in dutch disease for existing family members annual data for 1982 2013 and through applying standard testing methodologies our empirical findings suggest that such a fear is not valid since remittance flow significantly improves domestic labour productivity in bangladesh in the long run

remittances financial development and growth abstract despite the increasing importance of remittances in total international capital flows the relationship between remittances and growth has not been adequately studied this paper studies one of the links between remittances and growth in particular how local financial sector development influences a country s capacity to take advantage of remittances using a newly constructed dataset for remittances covering about 100 developing countries we find that remittances boost growth in countries with less developed financial systems by providing an alternative way to finance investment and helping overcome liquidity constraints this finding controls for the endogeneity of remittances and financial development does not depend on the particular measure of financial sector development used and is robust to a number of robustness tests including threshold estimation we also provide evidence that there could be an investment channel trough which remittances can promote growth especially when the financial sector does not meet the credit needs of the population

conditional variance and the risk premium in the foreign exchange market abstract we investigate the existence of a risk premium in the foreign exchange market based on the conditional variance of market forecast errors the forecast errors are assumed to follow the arch process introduced by engle 1982 estimation and diagnostic testing of the model are discussed and results are presented for the currencies of the united kingdom france germany japan and switzerland

the effect of real exchange rate uncertainty on ldc manufactured exports abstract this paper uses pooled time series cross sectional data to conduct an empirical investigation of the relationship between real exchange rate uncertainty and the manufactured exports of developing countries export supply equations for four categories of manufactures are estimated using pooled data for ten countries over the period 1963 1985 evidence is found that some categories of ldc manufactured exports are negatively affected by real exchange rate uncertainty

the effects of exchange rate volatility on exports some new estimates investigations of the impact of exchange rate volatility on exports have not allowed for the integrated non stationary of the variables employed in estimation the results reported in this note are suggestive that in the context of an error correction framework real exchange rate volatility has a significant impact on exports

the effects of foreign exchange movements on u s domestic prices this paper draws on the fields of international economics and industrial organization to model and empirically examine the relationship between currency value fluctuations and domestic producer prices the major focus is the issue of whether and why domestic industries differ systematically in their response to exchange rate changes the major findings are that changes in the external value of the u s dollar between 1974 and 1987 passed most fully into domestic prices of industries heavily reliant on imported inports and producing goods highly substitutable for imports highly capital intensive and concentrated industries and those protected by extensive barriers to entry both from domestic and foreign sources have exhibited less domestic price change from the exchange rate movements copyright 1989 by mit press

persistent trade effects of large exchange rate shocks this paper presents a theoretical basis for the argument that large exchange rate shocks such as the 1980s dollar cycle may have persistent effects on trade flows and the equilibrium exchange rate itself we begin with a partial equilibrium model in which large exchange rate fluctuations lead to entry or exit decisions that are not reversed when the currency returns to its previous level then we develop a simple model of the feedback from hysteresis in trade to the exchange rate itself here we see that a large capital inflow which leads to an initial appreciation can result in a persistent reduction in the exchange rate consistent with trade balance

exchange rate risk and u s agricultural trade flows this paper analyzes the effect of exchange rate risk on u s agricultural trade flows a model which incorporates exchange rate risk is applied to ten countries while exchange rate risk was not significant in the seven developed markets results indicate that the exchange rate variable adversely affected u s agricultural exports to the three developing countries used in the analysis these findings underscore the importance of exchange rate risk in developing countries trading behavior issues such as establishment of well developed financial and commodity markets in developing countries must be addressed in future research

exchange rate determination and inflation in southeast asian countries abstract we estimate structural open economy models consistent with rational re and theories consistent tce expectations which incorporate cointegration to examine exchange rate determination and inflation in three southeast asian countries the re model is rejected in favor of the tce model our results show that while inflation in all three countries is affected by different external factors malaysia and singapore avoided high inflation despite high levels of economic growth through tight monetary policy in contrast the philippines had high inflation even with a stagnant economy due to loose monetary policy and the monetization of government debt

public sector price controls and electoral cycles public enterprise prices are important policy instruments in developing economies this is why public sector price polices constitute a key element of stabilization programmes implemented in these economies however this significance is not specific to stabilization episodes first this study questions whether an opportunistic politician can manipulate public prices to win elections it analyses the impact of such price controls on budget deficits and the repercussions of alternative financing mechanisms of these deficits on the inflation rate and voters behaviour it is shown that electoral inflation cycles are obtained under domestic debt financing whereas money financing does not permit such a manipulative policy second by focusing on data of the turkish economy for the 1987 1 2003 12 period empirical evidence for such manipulative policies is given

financial development and economic growth international evidence the importance of the relationship between financial development and economic growth has been well recognized and emphasized in the field of economic development 1 although recent writings on this subject seem to accept the hypothesis that financial development is crucial for successful economic growth 2 patrick asked the critical question which sector financial or real leads in the dynamic process of economic development patrick identified two possible patterns in the causal relationship between financial development and economic growth in the first growth induces an expansion of the financial system 3 according to this view called demand following the lack of financial growth is a manifestation of the lack of demand for financial services as the real side of the economy develops its demands for various new financial services materialize and these are met rather passively from the financial side in the second pattern the expansion of the financial system precedes the demand for its services channeling scarce resources from small savers to large investors according to relative rates of return the financial sector precedes and induces real growth the deliberate establishment and promotion of financial institutions in many less developed countries ldcs might reflect this belief in the supply leading relationship between the two developments a natural question then concerns the direction of causality between financial development and economic growth patrick asserted that the direction of causality changes over the course of development in his view financial development is able to induce real innovation type investment before sustained modern economic growth gets under way and as the process of real growth occurs the supply leading impetus gradually becomes less important and the demand following financial response

the effects of macroeconomic stability on foreign trade an analysis for spain 1986 2000 two main factors underlie the rebirth of interest in the study of the influence of the real exchange rate on trade the reduction of its volatility and the current trend towards price stability the objective of this study is to analyse the effects of the process of nominal convergence required of the european member states for the fulfilment of monetary integration on foreign trade flows the case of spain which is especially interesting in this context is studied for the period 1986 to 2000 the results of estimating the aggregate functions of the export and import of goods shows how macroeconomic stability has altered the behaviour of trade with respect to the two basic determinants income and prices how it has caused a significant structural change in the real exchange rate and finally how it has laid the explanatory bases for transactions in the twenty first century with the single currency the euro

migrants remittances and financial development macro and micro level evidence of a perverse relationship financial development is commonly identified as an important condition for fostering investment and economic growth it is also believed that migrants remittances stimulate financial development in the receiving economy contributing indirectly to economic growth we explore the relationship between remittances and financial development using macro and micro level data from cross country panel data we find evidence of a negative relationship between remittances and financial deepening in developing countries using household survey data from a study of migrants remittances in two cis countries azerbaijan and kyrgyzstan we also investigate the relationship between remittances financial intermediation and financial literacy among remittance receiving households while we find some evidence of a positive albeit weak relationship for kyrgyzstan in azerbaijan the relatively more financially developed economy we uncover a strong perverse relationship remittances appear to deter bank intermediation and use of formal banking services possible reasons are explored and areas for further investigation identified

the effect of the asian financial crisis on the relationships among open macroeconomic factors for asian countries this study investigates the effect of asian financial crisis on the relationships among exchange rate volatility export import and productivity for taiwan korea malaysia and indonesia cointegration tests show no change for the long run equilibrium relationship among these variables throughout the crisis granger causality finds that some exogeneity orderings alter from pre to post crisis periods for the countries considered impulse response functions irs for the pre crisis period demonstrate the primary importance of productivity then second importance of export for the post crisis period oscillatory paths around zero of the irs imply an ambiguous finding for the direction of effect and relative exogeneity among variables studied the variance decompositions in export for taiwan korea and malaysia and in productivity for malaysia and indonesia did not change from the pre crisis to the post crisis era however most of the rest of the forecast error variances in variables were decomposed in

exchange rate effects on the volume and variability of trade flows abstract this paper investigates the effects of exchange rate uncertainty on the volume and variability of trade flows employing a signal extraction framework we show that the direction and magnitude of importers and exporters optimal trading activities depend upon the source of the uncertainty general microstructure shocks fundamental factors driving the exchange rate process or a noisy signal of policy innovations providing a rationale for the contradictory empirical evidence in the literature we also show that exchange rate uncertainty emanating from general microstructure shocks and the fundamental factors reduces the variability of trade flows while that related to a noisy signal of policy innovations increases variability

regime switching analysis for the impacts of exchange rate volatility on corporate values a taiwanese case a second moment regime switching model with not only a switching intercept and a switching slope but also a switching error variance is applied to examine the impacts of exchange rate volatility erv on corporate values cv for the 10 industries investigated in taiwan two different regimes categorized as strong impact and weak impact are identified the dominant power varies from one industry to another the wald statistics for the null of equality are ambiguous which show that if the markov switching ms model is plausible then the erv might not be one major factor but another factor that could switch the cv of taiwan s industries for the model s volatility influence the data of 8 out of 10 industries are shown to fit a two state model when the volatility is stimulated a two state first order ms model is appropriate for the goodness of fit analysis at the 10 significant level

exchange rate uncertainty and foreign trade abstract this paper starts with reviewing the existing literature on exchange rate uncertainty and trade flows it then argues that potential costs of medium term uncertainty in exchange rates and competitiveness are likely to be much larger than that of exchange risk which has been the focus of the existing literature two measures of medium term exchange rate uncertainty are constructed one is a weighted function of the magnitude of past movements in nominal exchange rates and the current deviation of the exchange rate from equilibrium while the second depends on both the duration and the amplitude of misalignment from equilibrium exchange rates the empirical evidence reported in the paper suggests that when exchange rate uncertainty is defined over a medium term period it does affect adversely trade flows of the industrial countries under review with the notable exception of the united states

remittance receipts and allocation a study of three african countries remittances may influence household expenditures poverty rates development and investments in the receiving country using world bank survey data from ethiopia uganda and kenya the influence of remitters and recipients characteristics on remittance amounts and allocation is examined effects of the remitter receiver characteristics on remittance amounts are generally similar between countries such similarities imply a potential similar effect of policies in these countries age household income frequency of communication family relations with remitter and country the recipient resided in influence remittance allocation recipients in ethiopia and uganda are more likely to allocate remittance towards savings than those in kenya

exchange rate volatility and the role of regional currency linkages the asean case as the economies of the association of southeast asian nations asean have moved towards closer economic ties and trade integration in recent years the establishment of exchange rate stability is becoming an important regional policy concern particularly in the wake of the asian currency crisis of 1997 this paper examines the exchange rate volatility of the currencies of indonesia malaysia philippines singapore and thailand between 1974 and 1999 using variance decomposition vdc methods and impulse response functions which are var related estimation techniques the study also investigates the regional currency linkages which may have played a role in transmitting exchange rate fluctuations the results indicate that in spite of the adoption of the crawling peg exchange regime following the breakup of the bretton woods system all of the five asean currencies experienced volatility with the indonesian rupiah posting the highest volatility level the switch to de facto pegging against the us dol

network effects and the dynamics of migration and inequality theory and evidence from mexico international migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate which can increase inequality in the sending community however the migration networks formed lower the costs for future migrants which can in turn lower inequality this paper shows both theoretically and empirically that wealth has a nonlinear effect on migration and then examines the empirical evidence for an inverse u shaped relationship between emigration and inequality in rural sending communities in mexico after instrumenting we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration we also find some suggestive evidence for an inverse u shaped relationship among communities with a wider range of migration experiences

the effects of real exchange rate risk on international trade abstract by assuming real profit maximization and uncertain prices as well as exchange rates we conclude that it is uncertain percentage changes in the real exchange rate that are risky in international trade empirical estimation of fourteen bilateral trade flows among industrialized countries finds a significant negative effect on trade quantity from such risk in a number of these cases the expectation variable has a positive effect in a larger number of cases significant price effects from the expectation variable are fewer and from risk are negligible

remittances and financial inclusion evidence from el salvador this paper investigates the impact of remittances on financial inclusion this is an important issue given recent studies showing that financial inclusion can have significant beneficial effects on households using household level survey data for el salvador the authors examine the impact of remittances on households use of savings and credit instruments from formal financial institutions they find that although remittances have a positive impact on financial inclusion by promoting the use of deposit accounts they do not have a significant and robust effect on the demand for and use of credit from formal institutions if anything by relaxing credit constraints remittances might reduce the need for external financing from financial institutions while at the same time increasing the demand for savings instruments

concentration profitability and trade in a simultaneous equation analysis the case of taiwan this paper is the first attempt to use a simultaneous four equation system to study the role of foreign trade in the analysis of market structure and performance and the determinants of trade intensity in a newly industrializing country taiwan a cross sectional analysis is carried out with the manufacturing censuses of 1976 the results indicate that public enterprises significantly influence market structures and performance also import control measures influence import intensity significantly and offset potential impacts of imports on concentration and on profitability however trade intensity is mainly explained by comparative advantage rather than market forces concentration and profitability

do international migration and remittances reduce poverty in developing countries summary few studies have examined the impact of international migration and remittances on poverty in the developing world this paper fills this lacuna by constructing and analyzing a new data set on international migration remittances inequality and poverty from 71 developing countries the results show that both international migration and remittances significantly reduce the level depth and severity of poverty in the developing world after instrumenting for the possible endogeneity of international migration and controlling for various factors results suggest that on average a 10 increase in the share of international migrants in a country s population will lead to a 2 1 decline in the share of people living on less than 1 00 per person per day after instrumenting for the possible endogeneity of international remittances a similar 10 increase in per capita official international remittances will lead to a 3 5 decline in the share of people living in poverty

u s japanese bilateral trade and the yen dollar exchange rate an empirical analysis the united states has recently experienced unprecedented balance of trade deficits the merchandise trade deficit reached an all time high of over 61 billion in 1983 and for 1984 was 108 billion japan is often singled out as the major contributor to this deficit in 1984 roughly one third of the u s merchandise trade deficit and over one half of the u s manufacturing trade deficit was with japan moreover since shifts in trade balances are widely regarded as a function of changes in exchange rates there has been a tendency to focus on the general depreciation of the yen in terms of the dollar which began in 1978 in explaining the u s trade deficit this paper explores empirically the response of the u s japanese trade balance in manufacturing to movements in the yen dollar rate the analysis based on both structural and reduced form approaches provides a test of the conventional view that the weak yen has been a major factor explaining the japanese penetration into the u s manufacturing sector while japanese protectionism has effectively insulated japan s markets from u s competition our analysis does not support this view we find u s imports from japan essentially insensitive to exchange rate movements but u s exports to japan highly exchange rate elastic since u s manufacturing imports from japan dominate corresponding exports 58 billion to 8 billion in 1984 we conclude that even a sustained appreciation of the yen in terms of the dollar is unlikely to reduce significantly the u s manufacturing trade deficit in section ii of this paper we specify structural and reduced form models explaining u s bilateral manufacturing trade with japan in section iii we present and evaluate struc

export performance in china s regional economies china enjoyed unprecedented economic growth in the 1980s and 1990s associated with this growth was the rapid expansion of exports from the chinese regions this study aims to provide an empirical assessment of export performance in the chinese regions during 1992 2001 it has shown that on an average china s regional economies have only achieved 70 of their export potential leaving substantial scope for improvement there is also considerable variation in export performance among the chinese regions with the noncoastal areas lagging behind in addition this article also shows that several region specific factors e g foreign direct investment government spending infrastructure development and the nonstate sector have affected regional export performance positively furthermore it is found that the development of china s western regions has boosted and will continue to improve the export sectors in these regions

why is it so difficult to find an effect of exchange rate risk on trade abstract it is commonly argued that exchange rate risk hampers international trade however the large literature on this subject has not yet provided conclusive evidence this paper analyzes why it is so difficult to obtain a clear answer from time series analyses we use data on bilateral aggregate u s exports to the other g7 countries the results show that as far as the exchange rate is concerned export decisions are mostly affected by the probability distribution of the about one year ahead rate the riskiness of the exchange rate at such a long horizon appears fairly constant over time with only short term fluctuations this makes it difficult to discover the true effect of exchange rate risk on trade from the time series data that are typically available

manufacturing growth and financial development evidence from oecd countries recent theoretical models conjecture that the development of the financial sector is essential for economic growth we investigate this hypothesis from a time series perspective and find that financial sector gdp is cointegrated for many oecd countries not so much with manufacturing gdp but mostly with manufacturing total factor productivity moreover this relation is in some instances characterized by long run causality in the sense of granger and lin however even within this homogeneous group of countries the variety of results suggests a more complex picture than is apparent from cross sectional evidence

the response of exchange rate pass through to market concentration in a small economy the evidence from korea this paper finds that domestic market concentration in korea a small country systematically affects pass through of individual industries the estimates suggest that exchange rates are only partially passed on to import prices in korea the evidence implies that imperfect competition is relevant for the exchange rate pass through even in a small economy this finding has important implications for issues such as inflationary effects of depreciation and the effect of trade liberalization

measuring and analysing the effects of short term volatility in real exchange rates this paper examines short term volatility in the real effective exchange rates of industrial countries and its impact on their imports it yields three conclusions first volatility has not diminished as markets have gained experience with floating exchange rates the trend appears to be in the opposite direction for some countries second exposure to short term volatility has differed among countries japan and sweden have experienced much more than most other industrial countries third volatility appears to depress the volume of international trade this third finding is consistent with results reported by cushman and by akhtar and hilton and challenges earlier findings by hooper and kohlhagen

real exchange rate volatility and the us bilateral trade a var approach this paper uses var models to investigate the impact of real exchange rate volatility on u s bilateral imports from the united kingdom france germany japan and canada the var systems include u s and foreign macro variables and are estimated separately for each country the major results suggest that the effect of volatility on imports is weak although permanent shocks to volatility do have a negative impact on this measure of trade and those effects are relatively more important over the flexible rate period copyright 1989 by mit press

fdi and economic growth new evidence on the role of financial markets this study uses a threshold regression model and finds new evidence that the positive impact of fdi on growth kicks in only after financial market development exceeds a threshold level until then the benefit of fdi is non existent

remittances and financial development empirical evidence from heterogeneous panel of countries remittances are the second largest source of external finance after foreign direct investment in the developing economies in this study we analyse the role of incoming remittances on financial de

taiwan s exports and trade imbalance against us and japan an empirical investigation based on error correction model this study employs recent advances in time series analysis cointegration and error correction model to examine the long run and short run determinants of the exports and trade imbalance between the usa japan and taiwan the unit root tests reveal nonstationary in most of the variables the cointegration tests affirm positive the long run associations are between the exchange rate changes and the exports as well as the trade imbalance once these long run effects are accounted for it is found that there are evidences of short run relationship between these variables

exchange rate volatility and exports from east asian countries to japan and the usa the purpose of this article is to investigate the impact of exchange rate volatility on exports in four east asian countries hong kong south korea singapore and thailand specifically this article aims at determining whether the bilateral real exchange rate volatility between an east asian country and its trading partner negatively affects the exports of the east asian country considering the dominant roles of the usa and japan as trading partners of those east asian countries this article focuses on the quarterly export volumes of east asian countries to the us and japan for the period from 1981 to 2004 except for the case of hong kong s exports to japan cointegration tests and estimations of error correction models indicate exchange rate volatility has negative impacts on exports either in the short run or in the long run or both on the other hand the real gdp of importing countries and depreciation of real bilateral exchange rates turn out in general to have positive effects of special

an empirical analysis of remittance flows into west african economic and monetary union a panel time series approach abstractthe article empirically analyses the motivations and long run economic outcomes of remittance inflows into the west african economic and monetary union using westerlund s 2007 ecm for panel time series and data spanning 1975 2011 the results show that there is no evidence of a long run impact of remittances on income per capita in the region the inflows seem to be motivated by investment but the money may be used to promote consumption instead this phenomenon could be characterized by information asymmetry between migrants and the recipients

exchange rate pass through when market share matters the authors investigate the pass through from exchange rates to import prices when firms future demands depend on their current market shares they show that profit maximizing foreign firms may either raise or lower their dollar export prices when the dollar appreciates temporarily i e the pass through may be perverse and that current import prices may be more sensitive to expected future exchange rates than to current exchange rates they present evidence that suggests the behavior of expected future exchange rates may provide a clue to the puzzling recent behavior of u s import prices copyright 1989 by american economic association

bilateral trade flows the linder hypothesis and exchange risk bilateral trade flows are used to examine the linder hypothesis and the effect of exchange rate variability in a gra vity type trade model derived from an underlying demand and supply mo del a behavioral model is used to justify examining these issues joi ntly the model performs well empirically using a sample of seventeen countries for the period 1974 82 the authors find overwhelming supp ort for the linder hypothesis and this version of the gravity model moreover they find strong support for the hypothesis that increased exchange rate variability affects bilateral trade flows copyright 1987 by mit press

exchange rate volatility international trade and the value of exporting firms abstract increased exchange rate volatility positively affects the value of exporting firms via the price and volume impacts of exchange rates and also makes an exporting strategy more attractive relative to the direct investment investment in export production capacity could therefore be a positive function of exchange rate volatility firms would also be more willing to sustain losses i e to engage in dumping before they abandon their export markets the effect on the volume and value of trade is ambiguous

what is the impact of international remittances on poverty and inequality in latin america workers remittances have become a major source of income for developing countries however little is still known about their impact on poverty and inequality using a large cross country panel dataset the authors find that remittances in latin american and caribbean lac countries have increased growth and reduced inequality and poverty these results are robust to the use of different instruments that attempt to correct for the potential endogeneity of remittances household survey based estimates for 10 lac countries confirm that remittances have negative albeit relatively small inequality and poverty reducing effects even after imputations for the potential home earnings of migrants

exchange rate volatility and exports a firm level analysis the relationship between real exports and exchange rate volatility is investigated using panel data analysis at the firm level results indicate that there is no negative or positive relationship between volatility and real exports in addition firm size and level of international activity do not influence the size and significance of the volatility effect on exports however there is some evidence that firms use import revenue to lower their exchange rate exposure

exchange rate volatility and pakistan s exports to the developed world 1974 85 abstract the paper attempts to estimate the impact of exchange rate uncertainty on pakistan s exports to the developed world for 1974 85 discovering strong evidence to suggest that exports were adversely affected by the increased variability of its bilateral exchange rates unlike much of the recent evidence on developed countries however it is the variability in nominal rather than real exchange rates that is significant the computations also suggest the presence of strong third country effects

international financial volatility and commodity exports evidence from the thai agricultural sector using 1981 2006 data from the bank of thailand i estimate the effect of four measures of real exchange rate volatility on thai exports of five key agricultural commodities controlling for both the level of the real exchange rate and foreign incomes estimates of the effect of volatility on export volume are generally negative and often significant lending support to a range of theoretical models that predict such an effect no such relationship exists between lagged values of exchange rate volatility and agricultural production the range of results obtained using various measures of volatility suggests caution in comparing studies using different measures copyright 2010 oxford university press

remittance inflows and financial development evidence from the top recipient countries in sub saharan africa this paper utilizes a panel cointegration approach to investigate the relationship between remittances and financial development in the top remittance recipient countries in sub saharan africa our

devaluation risk in target zones evidence from the nordic countries in this paper the authors estimate devaluation risk in denmark finland norway and sweden the target exchange ra te is modeled as a censored variable a shadow peg that is only observed when the equilibrium floating rate is too far from the prevailing peg using a two step procedure the authors are able to calculate time series of the probability and expected size of devaluations th e probability as well as the size of devaluations seem to be systematically related to a relation between the money stock industrial production foreign exchange reserves and the prevailing central parity copyright 1993 by royal economic society

exchange rates market structure and price cost margins evidence from a developing country this paper analyses the sensitivity of firm performance to exchange rate fluctuations in a two country world consisting of a developing domestic country and a developed foreign country we show that this sensitivity is closely related with market structure and the share of imported inputs in total cost when the share of imported inputs is low depreciation leads to an increase in price cost margin this increase intensifies in more competitive industries when the imported input share is high the price cost margin may decrease as a result of depreciation and this effect becomes pronounced in more competitive industries the empirical test where we used 3 digit turkish manufacturing industry data support most of the findings of our model

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

exchange rate variability and the export demand for malaysia s semiconductors an empirical study this article examines the effects of exchange rate variability on export demand for semiconductors which is the largest sub sector of electronics industry in malaysia as reported by malaysian industrial development authority mida 2004 the empirical results which are estimated based on the johansen s multivariate cointegration tests and error correction model suggest that there is a unique long run relationship among quantities of export relative price real foreign income and real exchange rate variability the major finding of this article is that the variability of real exchange rate has some effect on semiconductor exports in both the long run and the short run in the light of rapid advances in technology in the global markets for electronics products the findings are useful to policy makers for the design and target of appropriate exchange rate and industrial policies to enhance the export competitiveness of semiconductor industry

fdi productivity and financial development this paper examines the effect of foreign direct investment fdi on growth factor accumulation physical and human capital does not seem to be the main channel through which countries benefit f rom fdi instead we f ind that countries with well developed financial markets gain significantly

the effects of exchange rate variability on international trade a meta regression analysis the trade effects of exchange rate variability have been an issue in international economics for the past 30 years the contribution of this article is to apply meta regression analysis mra to the empirical literature on average exchange rate variability exerts a negative effect on international trade yet mra confirms the view that this result is highly conditional by identifying factors that help to explain why estimated trade effects vary from significantly negative to significantly positive mra evidence on the pronounced heterogeneity of the empirical findings may be instructive for policy first by establishing that average trade effects are not sufficiently robust to generalize across countries and second by suggesting the importance of hedging opportunities hence of financial development for trade promotion for the practice of mra we make a case for checking the robustness of results with respect to estimation technique model specification and sample

has exchange risk depressed international trade the impact of third country exchange risk abstract this paper argues that the effect of exchange risk on bilateral and aggregate trade flows should be analyzed by including the impact of third country exchange risk factors in addition to direct bilateral or multilateral risk after a theoretical examination of these effects us bilateral export flow to its six largest trading partners are analyzed empirically i find individuality and jointly significant third country risk effects in most cases in contrast to some recent bilateral efforts i find a steadily growing negative impact on trade flows from exchange risk during floating and in contrast to recent aggregate trade flow studies i conclude that there was no temporary decline in exchange risk during the late 1970s

fixed exchange rates and trade abstract a classic argument for a fixed exchange rate is its promotion of trade empirical support for this however is mixed while one branch of research consistently shows a small negative effect of exchange rate volatility on trade another more recent branch presents evidence of a large positive impact of currency unions on trade this paper helps resolve this disconnect our results which use a new data based classification of fixed exchange rate regimes show a large significant effect of a fixed exchange rate on bilateral trade between a base country and a country that pegs to it these results suggest an economically relevant role for exchange rate regimes in trade determination since a significant amount of world trade is conducted between countries with fixed exchange rates

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

effect of remittances on poverty and financial development in sub saharan africa summary this paper assesses the effect of the steadily growing remittance flows to sub saharan africa though the region receives only a small portion of the total recorded remittances to developing countries and the volume of aid flows to sub saharan africa swamps remittances this paper finds that remittances which are a stable private transfer have a direct poverty mitigating effect and promote financial development these findings hold even after factoring in the reverse causality between remittances poverty and financial development the paper posits that formalizing such flows can serve as an effective access point for unbanked individuals and households

exchange rates and prices the adjustment of relative prices to exchange rate movements is explained in an industrial organization approach given labor costs in the respective currencies exchange rate movements change costs for firms selling in the home market and thus disturb the industry equilibrium the extent of absolute and relative price adjustment is shown to depend on market integration product substitutability the relative number of domestic and foreign firms and the market structure the impact of exchange rates on prices is illustrated in a variety of approaches including the cournot a dixit and j stiglitz 1977 and s salop 1979 models some empirical evidence is offered in support of the theory copyright 1987 by american economic association

exchange rate variability and the flow of international trade abstract this study uses a garch generalized autoregressive conditional heteroskedasticity model to test if real exchange rate volatility has an adverse effect on the value of u s imports from canada we find that exchange rate uncertainty has a negative and statistically significant affect on trade flows