ASYMMETRIC EFFECTS OF EXCHANGE RATE VOLATILITY ON BILATERAL TRADE BETWEEN TAIWAN AND INDONESIA

Mei-Se Chien (), Nur Setyowati and Chih-Yang Cheng ()
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Mei-Se Chien: Department of Finance and Information, National Kaohsiung University of Science and Technology, 415 Chien Kung Road, Kaohsiung 807, Taiwan
Nur Setyowati: #x2020;Department of International Business, National Kaohsiung University of Science and Technology, Taiwan‡Accounting Department, Politeknik Negeri Semarang, Indonesia
Chih-Yang Cheng: #xA7;Department of Finance, National Sun Yat-Sen University, Taiwan

The Singapore Economic Review (SER), 2020, vol. 65, issue 04, 857-888

Abstract: This paper investigates the effect of exchange rate volatility on bilateral trade between Taiwan and Indonesia via 19 export and import industries. Considering the existence of an asymmetric effect of exchange rate volatility on trade, we employ an asymmetric ARDL model and arrive at the following main results. First, the long-run asymmetric effect of exchange rate volatility shows far higher impacts on Taiwan’s exports to Indonesia than on Taiwan’s imports from Indonesia. Second, the short-run asymmetric effect of exchange rate volatility causes unstable changes on the trade amounts for most of Taiwan’s export and import industries with Indonesia.

Keywords: Exchange rate volatility; asymmetrical ARDL; trade; Taiwan; Indonesia (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S021759082050006X

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