Title : Effect of Exchange Rate Volatility and Covid-19 on Indonesia-United States Bilateral Trade
Authors:
- Rossanto Dwi Handoyo
- Kabiru Hannafi Ibrahim
- Nadia Komaneci
- Deni Kusumawardani
- Yessi Rahmawati
- Tri Haryanto
- Finished Sarmidi
- Keiichi Ogawa
- Mohd Azlan Shah Zaidi
- Widya Sylviana
- Fernanda Reza Muhammad
- Angga Erlando
Department : Economics
Journal Name : International Journal of Sustainable Development and Planning
Kinds of Journal : Q2
Keywords : Ardl, Garch, Nardl, Asymmetric Effect, Bilateral Trade, Exchange Rate Volatility
Abstract:
Exchange Rate Volatility has created many uncertainties and thus almost bilateral trade flows among country. These uncertainties are enormous and are affecting exporters 'and importers' decision regarding trade due to their risk and the resultant negative effect on profit in most country. Indonesia and the United States were not an exception in this regard. Trade policies that are links to uncractives caused by exchange rate fluctuation are needs to stimulate trade among countries. To this end, this study analysis of the effect of positive and negative changes in exchange rate volatility and the Covid-19 Pandemic on the Indonesia-US Bilateral Commodity Trade Flow. A Time Series of Data Comprosing 30 Commodity Exports and Imports at Harmonized System 2-digit code were scrutinized for the period 2010: M01-2021: M01. Our Empirical Strategies Using the Garch Modeling Approach, Linear and Nonlinear Autoregressive Distributing Lag Models Revealed that: (i) Linear Ardl Exchange Rate Volatility ASSERTS a positive effect on 9 Commodity Exports and 6 Commodity Imports and 8 Commodity Imports were positively affected by the exchange rate volatility. These findings indicate that exporters and imports tend not to care about the risk associated with exchange rate volatility, and (iii) the finding further revealed that in the export of commodities Hs71, HS94, and HS95 there is evidence of Asymmetricic Effect. Coefficient, Sign, Size, and Duration. The Practical Significance of these Findings is that policymakers shouldentep the strategy of a one-sided exchange rate policy to accommodate different risk behavior as exported by exporters and importers. This would be helpful for the stability of the exchange rate and promote trade flows.
For details : https://doi.org/10.18280/ijsdp.190107
