On Trade Impact of Exchange Rate Volatility and Institutional Quality: The Case of Central European Countries

Imre Fertő and József Fogarasi

No 122510, 123rd Seminar, February 23-24, 2012, Dublin, Ireland from European Association of Agricultural Economists

Abstract: This paper explores the effect of exchange rate volatility and of the institutional quality on international trade flows of transition economies in Central European Countries by applying a gravity model of balance panel between 1999 and 2008. The results show that nominal exchange rate volatility has had a significant negative effect on trade by applying Psuedo-Maximum-Likelihood (PML) estimator method over this period. The institutional quality need to be improved in case of size of government and the quality of regulation. The negative effect of exchange rate volatility on agricultural exports suggests that joining Central European Countries to the euro zone can reduce the negative effects of exchange rate volatility on trade.

Keywords: International Relations/Trade; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 13
Date: 2012-02-23
New Economics Papers: this item is included in nep-int and nep-tra
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https://ageconsearch.umn.edu/record/122510/files/Ferto.pdf (application/pdf)

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Working Paper: On Trade Impact of Exchange Rate Volatility and Institutional Quality: The Case of Central European Countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa123:122510

DOI: 10.22004/ag.econ.122510

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