Contents of the volume

2020, Volume 73 - Issue 3

ISSN: 2499-8265
RSS feed citation: At RePEc
Publication date: 17 August 2020

HOW TO REFORM THE EU AND THE EMU

Nicola Acocella

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STRUCTURAL REFORMS IN THE EUROPEAN UNION: WHAT IS NEW AFTER THE CRISIS?

Luciano Marcello Milone

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EXCHANGE RATE VOLATILITY AND ITS IMPACT ON CHINA'S TRADE WITH THE UNITED STATES

Kamal Upadhyaya, Rabindra BHANDARI, Franklin G. JR. MIXON

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ASYMMETRIC PANEL CAUSALITY TESTS WITH AN APPLICATION TO THE IMPACT OF FISCAL POLICY ON ECONOMIC PERFORMANCE IN SCANDINAVIA

Abdulnasser Hatemi-J

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REAL ESTATE MARKET AND MACROECONOMIC FACTORS IN KUWAIT: AN ARDL APPROACH

Sadeq Abul, Ahmad M. AL-KANDARI

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Genoa Chamber of Commerce
Economia Internazionale / International Economics

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Corresponding author

Kamal UPADHYAYA, Department of Economics and Business Analytics, University of New Haven, West Haven, Connecticut, USA

Co-authors

Rabindra BHANDARI, Department of Business and Economics, Westminster College, Fulton, Missouri, USA

Franklin G. JR. MIXON , Center for Economic Education, Columbus State University, Columbus, Georgia, USA

Exchange Rate Volatility and its Impact on China's Trade with the United States

Pages

373-388

Abstract

Within the last few decades China has emerged as the largest trading partner of the United States.  Today, there is a growing pressure on China from the U.S. to move China into a fully floating and convertible exchange regime, a move that is likely to make China’s currency more volatile, leading to greater exchange rate risk in international commerce.  This paper is the first to investigate the effect of exchange rate volatility on China’s trade with the U.S.  In particular, we estimate and analyze the effect of RMB volatility in both China's exports to the USA as well as imports from the United States.  Using quarterly time series data from 1994 to 2017, results suggest that real depreciation of the Chinese yuan is negatively related with China’s exports to, and imports from, the United States.  Likewise, an increase in the U.S. income boosts China’s exports to the United States, while an increase in domestic output (i.e., Chinese real GDP) boosts China’s imports from the U.S.  As such, exchange rate volatility appears to have a negative effect on both exports and imports in China (vis-à-vis the U.S.), a result we attribute to the prevalence of risk averseness among the firms engaging in international trade in both countries.

JEL classification

F31, F33

Keywords

Exchange Rate Volatility, Exports, Imports, China, USA

Index

  1. Introduction and background
  2. Prior literature: a brief review
  3. Methodology and data
  4. Estimation and empirical results
  5. Concluding remarks

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