Impact of exchange rate volatility on commodity trade between U.S. and China: is there a third country effect
- 690 Downloads
Impact of exchange rate uncertainty on trade flows still continues to dominate the literature. Most previous research has used aggregate trade data between one country and the rest of the world or between two countries at a bilateral level. A recent study, however, considered the trade between the U.S. and China at the commodity level, but excluded the “third-country” effect in its analysis. In this paper, we consider the commodity trade between the U.S. and China one more time and investigate whether volatility of the real U.S. dollar-Canadian dollar has any implication on the trade flows between the U.S. and China. The answer happens to be in the affirmative, though a more significant third-country effect is found in the short run as compared to the long run.
KeywordsExchange Rate Volatility China The U.S. Canada Industry Data
- Bahmani-Oskooee M, Wang Y (2007) Impact of exchange rate volatility on commodity trade between U.S. and China. Econ Issues 12:31–54Google Scholar
- De Vita G, Abbott A (2004) Real exchange rate volatility and US exports: an ARDL bounds testing approach. Economic Issues 9:69–78Google Scholar
- Zhang Z (1999) China’s exchange rate reform and its impact on the balance of trade and domestic inflation. Asia Pac J Econ Bus 3:4–22Google Scholar