The effect of exchange rate volatility on international trade in East Asia

Kazunobu Hayakawa, Fukunari Kimura

Research output: Contribution to journalArticle

41 Citations (Scopus)

Abstract

In this paper, we empirically investigate the relationship between exchange rate volatility and international trade, focusing on East Asia. Our findings are summarized as follows: first, intra-East Asian trade is discouraged by exchange rate volatility more seriously than trade in other regions. Second, one important source of the discouragement is that intermediate goods trade in international production networks, which is quite sensitive to exchange rate volatility compared with other types of trade, occupies a significant fraction of East Asian trade. Third, the negative effect of the volatility is greater than that of tariffs and smaller than that of distance-related costs in East Asia.

Original languageEnglish
Pages (from-to)395-406
Number of pages12
JournalJournal of The Japanese and International Economies
Volume23
Issue number4
DOIs
Publication statusPublished - 2009 Dec 1

Keywords

  • East Asia
  • Exchange rate volatility
  • Trade

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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