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Asymmetric Effects Of Exchange Rate Volatility On Bilateral Trade Between Taiwan And Indonesia

Author

Listed:
  • MEI-SE CHIEN

    (Department of Finance and Information, National Kaohsiung University of Science and Technology, 415 Chien Kung Road, Kaohsiung 807, Taiwan)

  • NUR SETYOWATI

    (#x2020;Department of International Business, National Kaohsiung University of Science and Technology, Taiwan‡Accounting Department, Politeknik Negeri Semarang, Indonesia)

  • CHIH-YANG CHENG

    (#xA7;Department of Finance, National Sun Yat-Sen University, Taiwan)

Abstract

This paper investigates the effect of exchange rate volatility on bilateral trade between Taiwan and Indonesia via 19 export and import industries. Considering the existence of an asymmetric effect of exchange rate volatility on trade, we employ an asymmetric ARDL model and arrive at the following main results. First, the long-run asymmetric effect of exchange rate volatility shows far higher impacts on Taiwan’s exports to Indonesia than on Taiwan’s imports from Indonesia. Second, the short-run asymmetric effect of exchange rate volatility causes unstable changes on the trade amounts for most of Taiwan’s export and import industries with Indonesia.

Suggested Citation

  • Mei-Se Chien & Nur Setyowati & Chih-Yang Cheng, 2020. "Asymmetric Effects Of Exchange Rate Volatility On Bilateral Trade Between Taiwan And Indonesia," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(04), pages 857-888, June.
  • Handle: RePEc:wsi:serxxx:v:65:y:2020:i:04:n:s021759082050006x
    DOI: 10.1142/S021759082050006X
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    References listed on IDEAS

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    1. Arize, Augustine C & Osang, Thomas & Slottje, Daniel J, 2000. "Exchange-Rate Volatility and Foreign Trade: Evidence from Thirteen LDC's," Journal of Business & Economic Statistics, American Statistical Association, vol. 18(1), pages 10-17, January.
    2. Glauco De vita & Andrew Abbott, 2004. "The Impact of Exchange Rate Volatility on UK Exports to EU Countries," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(1), pages 62-81, February.
    3. Sarno,Lucio & Taylor,Mark P., 2003. "The Economics of Exchange Rates," Cambridge Books, Cambridge University Press, number 9780521485845, January.
    4. Arize, Augustine C. & Osang, Thomas & Slottje, Daniel J., 2008. "Exchange-rate volatility in Latin America and its impact on foreign trade," International Review of Economics & Finance, Elsevier, vol. 17(1), pages 33-44.
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    Cited by:

    1. Dogukan Tarakci & Fevzi Olmez & Dilek Durusu-Ciftci, 2022. "Exchange rate volatility and export in Turkey: Does the nexus vary across the type of commodity?," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 22(2), pages 77-89.
    2. 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.
    3. Lee, Chien-Hui & Li, Shu-Hui & Lee, Jen-Yu, 2022. "An asymmetric impact analysis of the exchange rate volatility on commodity trade between the U.S. and China," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 399-415.

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