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Short run and long run effects of exchange rate volatility on commodity trade between Pakistan and Japan

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  • Bahmani-Oskooee, Mohsen
  • Iqbal, Javed
  • Salam, Muhammad

Abstract

Earlier studies that examined the impact of exchange rate volatility on trade flows of Pakistan used aggregate trade data either between Pakistan and the rest of the world or at bilateral trade between Pakistan and her major trading partners. Not much support was found for significant impact of exchange rate uncertainty on trade flows by either group. Suspecting that they suffer from aggregation bias, we consider Pakistan–Japan trade flows but disaggregate them by commodity. In total, 44 Pakistani export industries to Japan and 60 Pakistani import industries from Japan were analysed. Contrary to our expectation and other disaggregated studies, not many industries were affected by exchange rate volatility neither in the short run nor in the long run.

Suggested Citation

  • Bahmani-Oskooee, Mohsen & Iqbal, Javed & Salam, Muhammad, 2016. "Short run and long run effects of exchange rate volatility on commodity trade between Pakistan and Japan," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 131-142.
    • Handle: RePEc:eee:ecanpo:v:52:y:2016:i:c:p:131-142
    DOI: 10.1016/j.eap.2016.09.002
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    References listed on IDEAS

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    2. Chrysanthi Balomenou & Erisa Pajollari, 2022. "Impact of Exchange Rate Volatility on International Trade: Case of USA and Canada," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 15(1), pages 47-57, July.
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    5. Rashid Latief & Lin Lefen, 2018. "The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”," IJFS, MDPI, vol. 6(4), pages 1-22, October.
    6. Bahmani-Oskooee, Mohsen & Gelan, Abera, 2018. "Exchange-rate volatility and international trade performance: Evidence from 12 African countries," Economic Analysis and Policy, Elsevier, vol. 58(C), pages 14-21.
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    8. Sung-Ko Li & Chun-Kei Tsang, 2020. "The Impacts Of Biased Resource Allocation On The Effectiveness Of Official Development Assistance," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 239-256, March.
    9. Viviane Naimy & Rim El Khoury & José-María Montero & Jana Souk, 2023. "Post-Brexit exchange rate volatility and its impact on UK exports to eurozone countries: A bounds testing approach," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 135-168, March.
    10. Pravakar Sahoo & Ashwani Bishnoi, 2021. "Investment Slowdown in India: Role of Fiscal-Monetary policy and Economic Uncertainty," IEG Working Papers 439, Institute of Economic Growth.
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    More about this item

    Keywords

    Exchange rate volatility; Commodity trade; Pakistan; Japan;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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