How sensitive are Malaysia's bilateral trade flows to depreciation?

Mohsen Bahmani-Oskooee, Hanafiah Harvey

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

In an attempt to assess the impact of currency depreciation on the trade balance, recent studies are employing disaggregated trade data to avoid aggregation bias. However, since import and export prices are not available at disaggregated level, recent studies are using export and import values rather than their volumes so that they can establish direct relation between inpayments and the exchange rate as well as between outpayments and the exchange rate. This study explores the experience of Malaysia. Bilateral inpayments and outpayments models are estimated between Malaysia and her 14 trading partners using quarterly data and bound testing approach to cointegration. The results show that while real depreciation of the ringgit has short-run effects, in the long-run it increases Malaysia's inpayments from only five trading partners.

Original languageEnglish (US)
Pages (from-to)1279-1286
Number of pages8
JournalApplied Economics
Volume38
Issue number11
DOIs
StatePublished - Jun 20 2006

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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