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Exchange Rate Volatility and U.S. Auto-Industry Exports: A Panel Cointegration Approach

Author

Listed:
  • Veysel Avsar

    (Antalya International University, Antalya, Turkey)

  • Kemal Turkcan

    (Akdeniz University, Department of Economics, Antalya, Turkey)

Abstract

Intermediate goods are often neglected in the empirical studies of the impact of exchange rate volatility on bilateral trade flows. Using import unit values of 58 motor vehicle products and 193 auto-parts, which are classified by the 10-digit level of Harmonized Tariff Schedule (HTS), this study examines the impact of exchange rate volatility on the U.S. automotive industry exports and imports (both motor-vehicle products and auto-parts) from 37 major trading partners for the period of 1996.01 to 2008.4 by using panel data cointegration techniques. We obtain substantial heterogeneity in terms of the impact of exchange rate volatility for final and intermediate goods. We also find support for the positive hypothesis that exchange rate volatility may lead to greater levels of trade.

Suggested Citation

  • Veysel Avsar & Kemal Turkcan, 2013. "Exchange Rate Volatility and U.S. Auto-Industry Exports: A Panel Cointegration Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 3(4), pages 772-787.
    • Handle: RePEc:eco:journ1:2013-04-1
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    More about this item

    Keywords

    Exchange rate volatility; the U.S. auto-parts industry; Fragmentation; Panel econometrics;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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