Asymmetric Response of Trade Flows to Exchange Rate Volatility
A special issue of Sustainability (ISSN 2071-1050).
Deadline for manuscript submissions: closed (30 November 2020) | Viewed by 230
Special Issue Editor
Interests: Asymmetry; nonlinearity; exchange rate volatility; currency appreciation; currency depreciation; trade flows and trade balance
Special Issue Information
Dear Colleagues,
The past several decades have seen considerable research on the relationship between the exchange rate and trade flows and much has been written on both the theoretical and empirical sides of the issue. No concise conclusion has emerged, and most of the studies have assumed the exchange rate and trade flow linkage as symmetrical in nature. That is, the behavior of trade balance or flows to exchange rate fluctuations is assumed to be the same for currency depreciation as it is for currency appreciation. Studies have shown that economic and financial variables, such as the exchange rate, can generate asymmetries and nonlinearities. These can be attributed to:
- Differing expectations by market participants;
- Policy issues of official exchange rate intervention;
- Stickiness of import and export prices and reactions to exchange rate fluctuations;
- Hysteresis in trade;
- Pricing-to-market behavior reactions.
Asymmetry would indicate that caution should be exercised in interpreting empirical results when symmetry is assumed, because both bias and mistakes are increasingly likely both in research and policy implications.
The focus of this Special Issue will therefore be to provide evidence-based conclusions on whether there are asymmetric dimensions to the response of trade flows to changes in exchange rates.
The topical issues of interest include, but are not restricted to:
- An asymmetric consideration of exchange rate changes on trade balance using developed or developing economies data;
- An asymmetric consideration of exchange rate volatility on trade flows in developed or developing countries;
Bilateral trade flow reactions to exchange rate in the face of currency appreciation and depreciation using evidence of both a country-specific and cross-country nature.
Dr. Augustine Chuck Arize
Guest Editor
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