DOES THE SERVICE TRADE OPENNESS MITIGATE REAL EXCHANGE RATE VOLATILITY?

Febrio Kacaribu (), Syahda Sabrina () and Teuku Riefky ()
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Febrio Kacaribu: University of Indonesia
Syahda Sabrina: University of Indonesia
Teuku Riefky: University of Indonesia

Bulletin of Monetary Economics and Banking, 2021, vol. 24, issue 2, 237-254

Abstract: This study examines the relationship between trade openness and exchange rate volatility. We use panel data of 52 countries and document trade openness has a negative and statistically significant effect on exchange rate volatility. The second explanatory variable considered in the model is money supply shock which is found to have a positive and statistically significant effect on exchange rate volatility. Our results survive battery of robustness checks.

Keywords: Real exchange rate; Trade openness; Money supply shock; Panel data (search for similar items in EconPapers)
JEL-codes: F30 F32 F40 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:24:y:2021:i:2e:p:237-254

DOI: 10.21098/bemp.v24i2.1168

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