The asymmetric effects of exchange rate changes on the trade balance of Singapore

Mohsen Bahmani-Oskooee, Hanafiah Harvey

Research output: Contribution to journalArticle

Abstract

Previous studies that tested the short-run and long-run effects of exchange rate changes on trade balances assumed that the effects are symmetric. The more recent research direction has now changed to investigating the possibility of asymmetric effects. In this paper, we assess the short-run and long-run effects of exchange rate changes on the bilateral trade balances of Singapore with her 11 partners. By applying the nonlinear ARDL approach, which separates appreciations from depreciations, we find that exchange rate changes have short-run asymmetric effects in most models. The short-run effects, however, lasted into the long run in a few models. In the long run, while depreciation improves Singapore's trade balance with the U.S., it hurts it with Malaysia and China. These three partners account for almost 50 % of Singapore's trade.

Original languageEnglish (US)
Article number20170055
JournalGlobal Economy Journal
Volume17
Issue number4
DOIs
StatePublished - Dec 20 2017

Fingerprint

Short-run
Exchange rates
Balance of trade
Singapore
Asymmetric effects
Trade balance
Depreciation
Autoregressive distributed lag model
Research directions
Malaysia
China
Bilateral trade

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

Cite this

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The asymmetric effects of exchange rate changes on the trade balance of Singapore. / Bahmani-Oskooee, Mohsen; Harvey, Hanafiah.

In: Global Economy Journal, Vol. 17, No. 4, 20170055, 20.12.2017.

Research output: Contribution to journalArticle

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