Exchange-rate volatility and commodity trade between the USA and Indonesia

Mohsen Bahmani-Oskooee, Hanafiah Harvey, Scott W. Hegerty

Research output: Contribution to journalArticle

Abstract

Since the introduction of the current system of floating exchange-rate regimes, the empirical literature on its implications has grown, with various studies exploring the effects of exchange-rate volatility using different data selection and modeling techniques. Most of these results have been mixed, finding that risk can have positive, negative, or insignificant effects on export and import flows. This study extends the empirical literature by focusing on the role of exchange-rate volatility on trade between the USA and Indonesia. We use disaggregated trade data by commodity and investigate 108 US export industries to Indonesia and 32 US import industries. Our results show that more than half of export and import industries are affected by real exchange-rate volatility in the short run. However, only a third of the export and import industries register long-run effects. We find that, for large industries, exports and imports behave similarly, but that far more small Indonesian exporters see their trade reduced by increased risk.

Original languageEnglish (US)
Pages (from-to)78-102
Number of pages25
JournalNew Zealand Economic Papers
Volume49
Issue number1
DOIs
StatePublished - Jan 1 2015

Fingerprint

Indonesia
Commodity trade
Import
Exchange rate volatility
Industry
Short-run
Exchange rate regimes
Modeling
Exporters
Floating exchange rates
Commodities
Real exchange rate volatility

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

Cite this

Bahmani-Oskooee, Mohsen ; Harvey, Hanafiah ; Hegerty, Scott W. / Exchange-rate volatility and commodity trade between the USA and Indonesia. In: New Zealand Economic Papers. 2015 ; Vol. 49, No. 1. pp. 78-102.
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Exchange-rate volatility and commodity trade between the USA and Indonesia. / Bahmani-Oskooee, Mohsen; Harvey, Hanafiah; Hegerty, Scott W.

In: New Zealand Economic Papers, Vol. 49, No. 1, 01.01.2015, p. 78-102.

Research output: Contribution to journalArticle

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