The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand
This paper attempts to identify the major economic factors that influence the bilateral trade balances of Malaysia and Thailand with the US and Japan. To this end, an unrestricted VAR model was estimated using quarterly frequency data from 1980: I to 1996: IV. The Johansen results indicate a stable...
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| Format: | Article |
| Language: | English |
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Blackwell Publishers
2001
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| Online Access: | http://psasir.upm.edu.my/id/eprint/40152/ http://psasir.upm.edu.my/id/eprint/40152/1/The%20effect%20of%20exchange%20rate%20on%20bilateral%20trade%20balance%20new%20evidence%20from%20Malaysia%20and%20Thailand.pdf |
| _version_ | 1848849344822771712 |
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| author | Baharumshah, Ahmad Zubaidi |
| author_facet | Baharumshah, Ahmad Zubaidi |
| author_sort | Baharumshah, Ahmad Zubaidi |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper attempts to identify the major economic factors that influence the bilateral trade balances of Malaysia and Thailand with the US and Japan. To this end, an unrestricted VAR model was estimated using quarterly frequency data from 1980: I to 1996: IV. The Johansen results indicate a stable long-run relation between trade and three macro variables: exchange rate, domestic income and foreign income. The main findings of this paper are: (i) the real effective exchange rate is an important variable in the trade balance equation and devaluation improves the trade balances of both economies in the long-run; (ii) the other important variables that determine trade balance include domestic and foreign incomes; (iii) the results indicate no J-curve effect and causal run from exchange rate to trade balance, (iv) the real effects of devaluation are distributed over a period of eight to nine quarters. |
| first_indexed | 2025-11-15T09:48:55Z |
| format | Article |
| id | upm-40152 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T09:48:55Z |
| publishDate | 2001 |
| publisher | Blackwell Publishers |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-401522015-09-14T00:37:03Z http://psasir.upm.edu.my/id/eprint/40152/ The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand Baharumshah, Ahmad Zubaidi This paper attempts to identify the major economic factors that influence the bilateral trade balances of Malaysia and Thailand with the US and Japan. To this end, an unrestricted VAR model was estimated using quarterly frequency data from 1980: I to 1996: IV. The Johansen results indicate a stable long-run relation between trade and three macro variables: exchange rate, domestic income and foreign income. The main findings of this paper are: (i) the real effective exchange rate is an important variable in the trade balance equation and devaluation improves the trade balances of both economies in the long-run; (ii) the other important variables that determine trade balance include domestic and foreign incomes; (iii) the results indicate no J-curve effect and causal run from exchange rate to trade balance, (iv) the real effects of devaluation are distributed over a period of eight to nine quarters. Blackwell Publishers 2001-09 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/40152/1/The%20effect%20of%20exchange%20rate%20on%20bilateral%20trade%20balance%20new%20evidence%20from%20Malaysia%20and%20Thailand.pdf Baharumshah, Ahmad Zubaidi (2001) The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand. Asian Economic Journal, 15 (3). pp. 291-312. ISSN 1351-3958; ESSN: 1467-8381 http://onlinelibrary.wiley.com/doi/10.1111/1467-8381.00135/abstract 10.1111/1467-8381.00135 |
| spellingShingle | Baharumshah, Ahmad Zubaidi The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand |
| title | The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand |
| title_full | The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand |
| title_fullStr | The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand |
| title_full_unstemmed | The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand |
| title_short | The effect of exchange rate on bilateral trade balance: new evidence from Malaysia and Thailand |
| title_sort | effect of exchange rate on bilateral trade balance: new evidence from malaysia and thailand |
| url | http://psasir.upm.edu.my/id/eprint/40152/ http://psasir.upm.edu.my/id/eprint/40152/ http://psasir.upm.edu.my/id/eprint/40152/ http://psasir.upm.edu.my/id/eprint/40152/1/The%20effect%20of%20exchange%20rate%20on%20bilateral%20trade%20balance%20new%20evidence%20from%20Malaysia%20and%20Thailand.pdf |