Exchange rate volatility, international trade, and the value of exporting firms
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Exchange rate volatility, international trade, and the value of exporting firms

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Published by European Institute for Advanced Studies in Management in Brussels .
Written in English


Book details:

Edition Notes

Includes bibliographical references.

StatementPiet Sercu, Cynthia Vanhulle.
SeriesWorking papers (European Institute for Advanced Studies in Management) -- no.90-11
ContributionsVan Hulle, Cynthia., European Institute for Advanced Studies in Management.
The Physical Object
Pagination30, (9)p. :
Number of Pages30
ID Numbers
Open LibraryOL18142295M

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Exchange Rate Volatility and Trade Flows - Some New Evidence Prepared by Peter Clark, Natalia Tamirisa, and Shang-Jin Wei, often involves major adjustments in the international value of these economies’ currencies. multinational firms, exchange rate volatility may have a File Size: 2MB. The effect of segmentation on exchange-rate volatility and trade. In the preceding section, we found a positive relation between trade and exchange rate volatility when the change in the underlying economy is an increase in the volatility of the endowment processes. But other exogenous changes can produce the opposite by: Exchange rate volatility and international trade page 2 of empirical work.2 Following this discussion, we describe how our analysis extends the existing models. In the early theoretical literature, a number of models were constructed to support the view that an increase in exchange rate volatility leads to a reduction in the level of. International Trade and Exchange Rate International trade volume data indicates developing countries play a bigger role in holding back trade growth, while developed countries show quite robust import growth. From a longer-term perspective, however, global trade volume has not deviated much from its long-term trend. Postglobal financial crisis,Cited by: 2.

Firms' decision to begin exporting and the exported value decrease for destinations with higher exchange rate volatility; besides, this effect is magnified for financially vulnerable firms. As expected, financial development seems to dampen this negative impact, especially on Cited by: in output, interest rates and the exchange rate” (Policy Targets Agreement, clause 4b). Understanding the impact of movements in the exchange rate on firms’ export and growth potential helps guide how best to consider volatility in the exchange rate alongside the other clause 4b objectives. Second, understanding how the exchange rate impacts onFile Size: KB. The results confirm a trade-deterring effect of RER volatility. Firms' decision to begin exporting and the exported value decrease for destinations with higher exchange rate volatility; besides, this effect is magnified for financially vulnerable firms. a specific channel through which exchange rate volatility may affect international trade. If the market structure allows a firm to view its exports as an option, then larger stochastic fluctuations of the exchange rate will increase the value of the export option and hence stimulate the firm's production activity.

Downloadable (with restrictions)! In this paper, we study how firm-level export performance is affected by Real Exchange Rate (RER) volatility and investigate whether this effect depends on existing financial constraints. Our empirical analysis relies on export data for more than , Chinese exporters over the –6 period. We confirm a trade-deterring effect of RER volatility. The aim of our study is to establish that a positive link between exchange rate volatility and international trade has a theoretical basis. The economic intuition for the mechanism derived in this paper is the following: As the exchange rate volatility increases, so does the value of . A set of meta-analysis present an extensive study regarding the effects of exchange rate volatility on international trade, including Ozturk (), Coric and Pugh (), and Bouoiyour and Selmi. Due to currency risk from rising exchange rate volatility, international businesses face increasingly complex challenges in managing their financial performance. Currency-related “headwinds” or “tailwinds” can powerfully impact short-term results, requiring attention from both executives and : Bill Camarda.