Does the exchange rate matter to bilateral trade between Korea and Japan? Evidence from commodity trade data

Jungho Baek

Economic Modelling, 2013, vol. 30, issue C, 856-862

Abstract: This study examines the short- and long-run effects of exchange rate changes on trade flows in the context of disaggregating industry data of bilateral trade between Korea and Japan. For this purpose, an autoregressive distributed lag (ARDL) approach is used. Results show that Korea's exports and imports are relatively sensitive to the bilateral exchange rate in the short-run, but less responsive in the long-run. It is also found that income in the two countries has significant impacts on the bilateral trade flows in both the short- and long-run. Finally, exchange rate uncertainty and Japanese FDI to Korea are found to have little impacts on Korea's trade with Japan in the short- and long-run.

Keywords: ARDL approach; Commodity trade; Exchange rate; Exports; Imports; Japan; Korea (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:30:y:2013:i:c:p:856-862

DOI: 10.1016/j.econmod.2012.11.020

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