On the asymmetric effects of exchange rate uncertainty on China’s bilateral trade with its major partners

Jia Xu, Mohsen Bahmani-Oskooee and Huseyin Karamelikli

Economic Analysis and Policy, 2022, vol. 73, issue C, 653-669

Abstract: Following recent advances in asymmetric impact of exchange rate volatility on trade flows, we assess the symmetric and asymmetric effects of exchange rate volatility on China’s bilateral trade with each of its 21 trading partners. We find symmetric effects in only a few bilateral trade models. However, the asymmetric analysis which required using nonlinear models revealed short-run asymmetric effects in almost all export and import demand models and log-run significant asymmetric effects in 50% of the models. In almost all models, while increased volatility was found to hurt Chinese trade, decreased volatility was found to boost them, implying that stable exchange rate is beneficial for China’s trade.

Keywords: Exchange rate uncertainty; China; 15 partners; Trade; Asymmetric analysis (search for similar items in EconPapers)
JEL-codes: F14 F31 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:73:y:2022:i:c:p:653-669

DOI: 10.1016/j.eap.2021.12.017

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