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On the asymmetric effects of exchange rate volatility on the trade flows of India with each of its fourteen partners

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  • Mohsen Bahmani-Oskooee
  • Sujata Saha

Abstract

In this paper, we assess the impact of exchange rate volatility on India’s exports to and imports from each of its 14 largest trading partners. We find evidence of short-run asymmetric effects in almost all cases that translate into long-run asymmetric effects in almost half of the sample. The findings are partner specific. For the largest trading partner, China with 11.17% of trade share, we found that increase in real rupee–yuan volatility has significantly positive effects on India’s exports to China but decrease in volatility has no effects. In the case of the second largest partner, the US, with 10.48% share of trade, increase in real rupee–dollar volatility has positive long-run effects on both India’s export to and imports from the US but decrease in volatility has no impact on either.

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  • Mohsen Bahmani-Oskooee & Sujata Saha, 2021. "On the asymmetric effects of exchange rate volatility on the trade flows of India with each of its fourteen partners," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 14(1), pages 66-85, January.
    • Handle: RePEc:taf:macfem:v:14:y:2021:i:1:p:66-85
    DOI: 10.1080/17520843.2020.1765826
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    1. Mohsen Bahmani-Oskooee & Augustine C. Arize & Ebere Ume Kalu, 2023. "On the asymmetric effects of exchange rate volatility on the U.S. Bilateral Trade with its 12 South American partners," Economic Change and Restructuring, Springer, vol. 56(2), pages 701-732, April.
    2. 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.
    3. Gobbi, Lucio & Lucarelli, Stefano, 2022. "Pound Sterling depreciation and the UK's trade balance versus the USA's: Industry-level estimates," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 206-220.

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