Does exchange-rate uncertainty matter in the Malaysia–E.U. bilateral trade? An industry level investigation

Aftab, M. and Ahmad, R. and Ismail, I. and Ahmed, M. (2016) Does exchange-rate uncertainty matter in the Malaysia–E.U. bilateral trade? An industry level investigation. Empirica, 43 (3). pp. 461-485. ISSN 0340-8744

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Official URL: http://dx.doi.org/10.1007/s10663-015-9302-6

Abstract

Due to ambiguity in the past literature, researchers have examined exchange rate volatility effect on trade using disaggregated data in recent years. Previous research has focused more on aggregated data having aggregation bias which has led to unnecessarily over-generalized findings. This study investigates the impact of exchange rate volatility on the Malaysian bilateral trade flows with European Union using industry level data. Our empirical findings, based on auto-regressive distributed lag framework, suggest that many import and export industries experience exchange rate volatility influence in the short run, while a very small number of industries show this effect in the long run. Moreover, the adverse impact of financial crisis (2007–2008) is more prevalent on import industries compared to export industries.

Item Type: Article
Uncontrolled Keywords: Exchange rate risk; Bilateral trade; Malaysia; European Union
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Business and Accountancy
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 24 Oct 2017 03:07
Last Modified: 24 Oct 2017 03:07
URI: http://eprints.um.edu.my/id/eprint/18081

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