An asymmetric impact analysis of the exchange rate volatility on commodity trade between the U.S. and China

Abstract

This paper uses an asymmetric ARDL model to examine the influence of real exchange rate volatility on trade flows between the United States and China from January 2003 to June 2020, with the top twelve sectors of disaggregated data being employed. The results show that nonlinear adjustment of the volatility has a more significant outcome than the ARDL model on both U.S. exports to and imports from China in the long-run, while increased volatility will boost both U.S. imports from and exports to China. Besides, it shows that China benefits from U.S.- China trade on the selected sectors after joining the WTO more than the United States.