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Testing Asymmetrical Effect of Exchange Rate on Saudi Service Sector Trade: A Non-linear Auto-regressive Distributive Lag Approach

Author

Listed:
  • Haider Mahmood

    (Department of Finance, College of Business Administration, Prince Sattam Bin Abdulaziz University, Al-Kharj, Saudi Arabia,)

  • Tarek Tawfik Yousef Alkhateeb

    (Department of Marketing, College of Business Administration, Prince Sattam Bin Abdulaziz University, Al-Kharj, K.S.A,)

  • Tarek Tawfik Yousef Alkhateeb

    (Department of Agricultural Economics, Kafr Elsheikh University, Egypt.)

Abstract

Present study explores the impact of devaluation and appreciation (negative and positive movements of exchange rate) on services sector trade by applying nonlinear auto-regressive distributive lag technique of Shin et al. (2014). This study confirms asymmetrical effects in case of all sectors in short run and long run effects may improve the trade balance of all sectors. Overall devaluation confirms existence of J-curve after some lag. This study also found that appreciation of a Saudi currency may put up adverse effects on trade balance in all services sectors except travel, construction and tourism sectors. The increase in world income may support to enhance exports of Saudi Arabia, while rise in Saudi Arabia's income may have negative effects on trade balance of all services sectors except travel and tourism.

Suggested Citation

  • Haider Mahmood & Tarek Tawfik Yousef Alkhateeb & Tarek Tawfik Yousef Alkhateeb, 2017. "Testing Asymmetrical Effect of Exchange Rate on Saudi Service Sector Trade: A Non-linear Auto-regressive Distributive Lag Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 73-77.
    • Handle: RePEc:eco:journ1:2017-01-11
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mahmood, Haider & Chaudhary, A. R., 2013. "Impact of FDI on Income Inequality in Pakistan," MPRA Paper 109460, University Library of Munich, Germany.
    2. Mahmood, Haider, 2018. "An Investigation of Macroeconomic Determinants of FDI Inflows in Bangladesh," MPRA Paper 109448, University Library of Munich, Germany.
    3. Maolin Cheng & Bin Liu, 2019. "Analysis on the Influence of China’s Energy Consumption on Economic Growth," Sustainability, MDPI, vol. 11(14), pages 1-25, July.
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    5. Gulzar Ali & Kaleem Ullah & Said Zamin Shah & Shaista Khan, 2022. "Testing Of Marshall-Lerner Condition: Evidence From Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 11(1), pages 46-52, March.
    6. Nathan Audu & Titus Obiezue, 2022. "Exchange Rate and Trade in Services Nexus in Nigeria: A Non-Linear ARDL Approach," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 8(1), pages 79-96, January.
    7. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Maalel, Nabil, 2017. "Egyptian Intra Agriculture Trade with Common Market for Eastern and Southern Africa Trading Partners: A Gravity Model," MPRA Paper 109145, University Library of Munich, Germany.
    8. Alkhateeb, Tarek Tawfik Yousef & Alkahtani, Nasser Saad & Mahmood, Haider, 2017. "Assessing the Role of Foreign Labour on Saudi Labour Unemployment in Saudi Arabia," MPRA Paper 109449, University Library of Munich, Germany.

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    More about this item

    Keywords

    Devaluation; Trade; Asymmetry;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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