IDEAS home Printed from https://ideas.repec.org/a/ist/ekoist/v0y2024i41p1-12.html
   My bibliography  Save this article

Effect of Exchange Rate Volatility on Export Volume in BRICS and G7 Countries: Panel Data Analysis

Author

Listed:
  • Zeynep Morçiçek

    (İstanbul Nişantaşı Üniversitesi, Meslek Yüksekokulu, Lojistik Programı, İstanbul, Türkiye)

Abstract

RIn line with the advancements in the international monetary system from the 1870s to the present day, countries have adopted both fixed and flexible exchange rate regimes. Under the fixed exchange rate regime, countries preferred to realize devaluation by devaluing their currencies to gain a competitive advantage and reach the desired commercial position, especially in the 1930s. However, this situation caused the trading partner countries to resort to retaliatory monetary and trade policies afterward. Thus, countries entered a competitive devaluation cycle one after another. Furthermore, it is known that countries make various interventions in the foreign exchange market to gain a competitive advantage under the flexible exchange rate regime applied under today’s conditions. Especially after the global financial crisis, countries accusing each other of exchange rate manipulation brought these debates back to today’s agenda. The present study examined the exchange rate volatility of both developed (G7) and developing (BRICS) countries and its effect on export volume by panel data analysis. In the analysis, the exchange rate volatility of countries was accepted as the main determining variable on export volume. Whereas empirical findings confirmed the effect of exchange rate volatility on export volume in BRICS countries, it was found that exchange rate volatility has no effect on export volume in G7 countries. Moreover, since the effect of exchange rate volatility on export volume in BRICS countries is negative, it was understood that exchange rate volatility causes a trade contraction effect. However, a similar conclusion could not be reached for G7 countries. In this regard, our study is important in that exchange rate volatility affects developed and developing countries in different ways and this difference needs to be revealed.

Suggested Citation

  • Zeynep Morçiçek, 2024. "Effect of Exchange Rate Volatility on Export Volume in BRICS and G7 Countries: Panel Data Analysis," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(41), pages 1-12, December.
    • Handle: RePEc:ist:ekoist:v:0:y:2024:i:41:p:1-12
    DOI: 10.26650/ekoist.2024.41.1308676
    as

    Download full text from publisher

    File URL: https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/EF2C5D7A13FD4CF887E67A64487ECEF2
    Download Restriction: no
    File URL: https://iupress.istanbul.edu.tr/tr/journal/ekoist/article/brics-ve-g7-ulkelerinde-doviz-kuru-oynakliginin-ihracat-hacmi-uzerindeki-etkisi-panel-veri-analizi
    Download Restriction: no
    File URL: https://libkey.io/10.26650/ekoist.2024.41.1308676?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ahmed,Swarnali & Appendino,Maximiliano Andres & Ruta,Michele, 2015. "Depreciations without exports ? global value chains and the exchange rate elasticity of exports," Policy Research Working Paper Series 7390, The World Bank.
    2. Berthou, Antoine, 2008. "An investigation on the effect of real exchange rate movements on OECD bilateral exports," Working Paper Series 920, European Central Bank.
    3. Eichengreen, Barry, 1988. "Real exchange rate behavior under alternative international monetary regimes : Interwar evidence," European Economic Review, Elsevier, vol. 32(2-3), pages 363-371, March.
    4. Tenreyro, Silvana, 2007. "On the trade impact of nominal exchange rate volatility," Journal of Development Economics, Elsevier, vol. 82(2), pages 485-508, March.
    5. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
    6. Justin B. May, 2010. "International Financial Volatility and Commodity Exports: Evidence from the Thai Agricultural Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 763-775.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erdal Demirhan & Banu Demirhan, 2015. "The Dynamic Effect of ExchangeRate Volatility on Turkish Exports: Parsimonious Error-Correction Model Approach," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(4), pages 429-451, September.
    2. Huang, Alex YiHou & Peng, Sheng-Pen & Li, Fangjhy & Ke, Ching-Jie, 2011. "Volatility forecasting of exchange rate by quantile regression," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 591-606, October.
    3. Allison Roehling, 2021. "Implications of exchange rate volatility for trade: Volatility measurement matters," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1486-1523, November.
    4. Diego Bastourre & Luis Casanova & Alejo Espora, 2011. "Tipo de Cambio Real y Crecimiento: Síntesis de la Evidencia y Agenda de Investigación," Department of Economics, Working Papers 082, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
    5. Hyun Kook Shin & Byoung Hark Yoo, 2012. "The Volatility Of The Won-Dollar Exchange Rate During The 2008-9 Crisis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(4), pages 61-77, December.
    6. Yusaku Nishimura & Bianxia Sun, 2018. "China’s Exchange-Rate Regime Reform and Trade Between China and the Eurozone," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(2), pages 450-467, January.
    7. Kandilov, Ivan T. & Leblebicioglu, AslI, 2011. "The impact of exchange rate volatility on plant-level investment: Evidence from Colombia," Journal of Development Economics, Elsevier, vol. 94(2), pages 220-230, March.
    8. Zhang, Hao & Zhu, Jiaqing, 2022. "Does trade cause fear of appreciation?," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 68-80.
    9. Diego Bastourre & Luis Casanova & Alejo Espora, 2011. "Tipo de Cambio Real y Crecimiento: Síntesis de la Evidencia y Agenda de Investigación," IIE, Working Papers 082, IIE, Universidad Nacional de La Plata.
    10. Bajo-Rubio, Oscar & Berke, Burcu & McMillan, David G., 2020. "Exchange rate volatility in the eurozone," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 14, pages 1-23.
    11. Páll, Zsombor, 2015. "Three essays on the Russian wheat export," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 80, number 80.
    12. Chandan Sharma & Debdatta Pal, 2019. "Does Exchange Rate Volatility Dampen Imports? Commodity-Level Evidence From India," International Economic Journal, Taylor & Francis Journals, vol. 33(4), pages 696-718, October.
    13. Hasanov Akram, 2011. "Exchange rate risk and trade flows: the case of Belarus, Kazakhstan, Russia, and Ukraine," EERC Working Paper Series 11/09e, EERC Research Network, Russia and CIS.
    14. Muhammad Aftab & Karim Bux Shah Syed & Rubi Ahmad & Izlin Ismail, 2016. "Exchange-rate variability and industry trade flows between Malaysia and Japan," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(4), pages 453-478, June.
    15. Seiler, Volker, 2024. "The relationship between Chinese and FOB prices of rare earth elements – Evidence in the time and frequency domain," The Quarterly Review of Economics and Finance, Elsevier, vol. 95(C), pages 160-179.
    16. Beran, Jan & Feng, Yuanhua, 1999. "Local Polynomial Estimation with a FARIMA-GARCH Error Process," CoFE Discussion Papers 99/08, University of Konstanz, Center of Finance and Econometrics (CoFE).
    17. Corbet, Shaen & Larkin, Charles & McMullan, Caroline, 2020. "The impact of industrial incidents on stock market volatility," Research in International Business and Finance, Elsevier, vol. 52(C).
    18. Minot, Nicholas, 2014. "Food price volatility in sub-Saharan Africa: Has it really increased?," Food Policy, Elsevier, vol. 45(C), pages 45-56.
    19. Lahmiri, Salim & Bekiros, Stelios, 2017. "Disturbances and complexity in volatility time series," Chaos, Solitons & Fractals, Elsevier, vol. 105(C), pages 38-42.
    20. Tomanova, Lucie, 2013. "Exchange Rate Volatility and the Foreign Trade in CEEC," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 267, Ekonomik Yaklasim Association.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ist:ekoist:v:0:y:2024:i:41:p:1-12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Istanbul University Press Operational Team (Ertuğrul YAŞAR) (email available below). General contact details of provider: https://edirc.repec.org/data/ifisttr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.