Abstract
This paper empirically investigates the effect of exchange rate uncertainty on cereals export flows for a broad sample of 75 countries during the 2010/01 - 2016/12 period. To do this, we first estimate the exchange rate volatility, and then, we estimate the cereals export demand by using a panel data model with autoregressive vectors (P-VAR). This strategy of analysis is applied over different groups of countries, which are obtained by cluster analysis based on the level of exchange rate volatility and the volume of cereals exports. The empirical results suggest a significant negative effect of exchange rate uncertainty on cereals exports in countries characterized by high and persistent exchange rate volatility or high volume of cereals exports.
Highlights
Since the adoption of floating exchange rate regimes in 1973, with the collapse of the fixed exchange rate system adopted at Bretton-Woods, the effect of exchange rate uncertainty on international trade has been relevant for economies (Kandilov, 2008)
This paper examines the relationship between exchange rate uncertainty and cereals exports for a large panel of developed and developing countries over 2010/01 - 2016/12, using a panel con vectores auto-regresivos (P-VAR) methodology
The empirical literature on this issue is extensive, to our knowledge no previous studies examine the links between exchange rate uncertainty and cereals exports
Summary
Since the adoption of floating exchange rate regimes in 1973, with the collapse of the fixed exchange rate system adopted at Bretton-Woods, the effect of exchange rate uncertainty on international trade has been relevant for economies (Kandilov, 2008). Several scholars (Dawson 2005; Sanjuán-López and Dawson 2010; Kang 2015) support the export-led hypothesis for agricultural exports in developing countries, where export performance is an important determinant of economic growth rate In this context, exports may contribute to economic growth through various channels: via the foreign trade multiplier, foreign exchange from exports can. We provide empirical evidence of the relationship between cereals exports and REER volatility in a large sample of countries. To examine this issue, we analyse and compare different groups of countries.
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