The effects of exchange rate volatility on international trade flows: evidence from panel data analysis and fuzzy approach

Elif Nuroğlu and Robert Kunst ()

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to analyze the effects of exchange rate volatility on international trade fl ows by using two different approaches, the panel data analysis and fuzzy logic, and to compare the results. To a panel with the crosssection dimension of 91 pairs of EU15 countries and with time ranging from 1964 to 2003, an extended gravity model of trade is applied in order to determine the effects of exchange rate volatility on bilateral trade fl ows of EU15 countries. The estimated impact is clearly negative, which indicates that exchange rate volatility has a negative infl uence on bilateral trade fl ows. Then, this traditional panel approach is contrasted with an alternative investigation based on fuzzy logic. The key elements of the fuzzy approach are to set fuzzy decision rules and to assign membership functions to the fuzzy sets intuitively based on experience. Both approaches yield very similar results and fuzzy approach is recommended to be used as a complement to statistical methods.

Keywords: linguistic modeling; fuzzy relations; exchange rate volatility; bilateral trade; gravity model (search for similar items in EconPapers)
JEL-codes: C23 F14 (search for similar items in EconPapers)
Date: 2012-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Zbornik radova Ekonomskog fakulteta u Rijeci. Proceedings of Rijeka Faculty of Economics: Journal of Economics and Business 1.30(2012): pp. 9-31

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/49952/1/MPRA_paper_49952.pdf original version (application/pdf)

Related works:
Journal Article: The effects of exchange rate volatility on international trade flows: evidence from panel data analysis and fuzzy approach (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:49952

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().