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Economic Change and Restructuring

, Volume 50, Issue 2, pp 161–187 | Cite as

Impact of exchange rate volatility on the commodity trade between Pakistan and the US

  • Mohsen Bahmani-OskooeeEmail author
  • Javed Iqbal
  • Saqib Ullah Khan
Article

Abstract

The impact of exchange rate volatility on the trade flows has been intensively studied by researchers after the adoption of flexible exchange rate system. Different studies have used data from different countries at different aggregation level. In this paper we consider the experiences of 57 Pakistan’s exporting to and 52 importing industries from the US over the period 1980–2014. We find that almost 50 % of the industries are affected by exchange rate volatility in the short-run. However, short-run effects last into the long run only in 26 exporting industries and 18 importing industries. Due to such disaggregation we find that all four large exporting and importing industries are affected positively in the long run. The list includes industries coded 656 (made up articles with 32.45 % of exports share), 841 (clothing with 50.7 % exports share), 263 (cotton with 8.64 % import share) and 282 (iron and steel scrap with 2.10 % imports share).

Keywords

Exchange rate uncertainty Industry data Bounds testing Pakistan The United States 

JEL Classification

F31 

Notes

Acknowledgments

Valuable comments of an anonymous referee and those of the editor are greatly appreciated.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Mohsen Bahmani-Oskooee
    • 1
    Email author
  • Javed Iqbal
    • 2
  • Saqib Ullah Khan
    • 2
  1. 1.Department of EconomicsThe University of Wisconsin-MilwaukeeMilwaukeeUSA
  2. 2.School of EconomicsQuaid-i-Azam UniversityIslamabadPakistan

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