Trade Flows, Exchange Rate Uncertainty and Financial Depth: Evidence from 28 Emerging Countries

Mustafa Caglayan (), Omar Dahi and Firat Demir
Additional contact information
Omar Dahi: Hampshire College

No 2010011, Working Papers from The University of Sheffield, Department of Economics

Abstract: We investigate the effects of real exchange rate uncertainty and financial depth on manufactures exports from 28 emerging economies to the North and South over 1978-2005. We estimate a dynamic panel model using system GMM approach and show that for the majority of countries in our sample exchange rate uncertainty affects both South-South and South-North trade negatively. Furthermore, for several cases we discover that this effect is unidirectional, that is South-South or South-North. In addition, we find that while financial depth plays a trade-enhancing role, exchange rate shocks can negate this effect. We also show that trade among developing economies is likely to enhance export growth.

Keywords: Trade flows; Exchange rate uncertainty; South-South trade; Financial depth; Dynamic panel data (search for similar items in EconPapers)
JEL-codes: E44 F15 F31 G15 O14 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2010-05, Revised 2010-05
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.shef.ac.uk/economics/research/serps/articles/2010_011.html First version, 2010 (application/pdf)

Related works:
Journal Article: Trade Flows, Exchange Rate Uncertainty, and Financial Depth: Evidence from 28 Emerging Countries (2013)
Working Paper: Trade flows, exchange rate uncertainty and financial depth: evidence from 28 emerging countries (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:shf:wpaper:2010011

Access Statistics for this paper

More papers in Working Papers from The University of Sheffield, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Mike Crabtree ().