Exchange Rate Volatility and Trade Flows

Year 2017, Volume: 1 Issue: 3, 14 - 39, 30.09.2017

Ali Eren Alper

https://doi.org/10.25295/fsecon.307331

Cited By: 5

Abstract

After the collapse of Bretton-Woods
system in 1973, many countries adopted the floating exchange rate regime. This
situation led to fluctation and uncertainties in the exchange rates. There are
number of studies that analyze the effect of Exchange rate volatility on trade
flows but previous studies cannot obtain results about sectoral base due to the
lack of disaggregated data sets. This study investigates the effects of
exchange rate volatility on trade flows in Turkey. For this purpose using
annual data covers the period 2002-2013. Exports to 15 European countries and
imports from 15 European countries are analyzed by panel methodology.  According to the test results, export sectors
are negatively affected; import sectors are both positively and negatively
affected from exchange rate volatility.

Keywords

Exchange rate volatility, trade flows, panel data analysis

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