Abstract
PurposeThe purpose of this paper is to assess asymmetric effects of exchange rate changes on Thailand’s trade balances.Design/methodology/approachThe design methodology is based on the nonlinear ARDL approach of Shin et al. (2014).FindingsThe authors find strong support for the asymmetric effects of exchange rate changes on the Thailand trade balance with most partners, including the three largest partners, China, Japan and the USA.Research limitations/implicationsThe long-run asymmetric effects revealed that while baht depreciation will hurt Thailand’s trade balance with China, it will improve its trade balance with the USA and has no effects with Japan.Practical implicationsThe trade balance of different partners reacts differently to currency depreciation.Social implicationsA currency depreciation that improves the trade balance by promoting exports also helps to reduce the rate of unemployment.Originality/valueNo study has assessed the asymmetric effects of exchange rate changes on the Thailand’s trade balance with its major partners.
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