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The effects of exchange rate variability on Malaysia's disaggregated electrical exports

The effects of exchange rate variability on Malaysia's disaggregated electrical exports Purpose – This paper aims to examine the influence of exchange rate variability on the demand for Malaysia's top five electrical exports as classified by Standard International Trade Classification (SITC) product groups. Design/methodology/approach – The autoregressive distributed lag (ARDL) modelling approach to co‐integration is employed in order to estimate the influence of exchange rate variability on export demand. Findings – The empirical results indicate that foreign income and prices are important determinants of export demand for all of the five electrical exports, in both the long run and the short run, over the sample period 1990‐2001. More interestingly, this paper supports the view that exchange rate variability has an adverse effect on Malaysia's electrical exports. Research limitations/implications – One limitation of the study is the appropriateness of the ARDL modelling approach to examine the influence of exchange rate variability (which is stationary, I (0)) on trade behaviour such as export demand behaviour. Practical implications – This paper is important to policymakers for the design of both exchange rate and trade policies in order to promote export growth, which could lead to Malaysia's transition towards high‐technology industrialisation. Originality/value – This paper examines the influence of exchange rate variability on the demand for Malaysia's top five electrical exports as classified by SITC product groups, information which is not available in the existing literature. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

The effects of exchange rate variability on Malaysia's disaggregated electrical exports

Koi Nyen Wong; Tuck Cheong Tang
Journal of Economic Studies , Volume 35 (2): 16 – May 16, 2008
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References (63)

Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
0144-3585
DOI
10.1108/01443580810870146
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper aims to examine the influence of exchange rate variability on the demand for Malaysia's top five electrical exports as classified by Standard International Trade Classification (SITC) product groups. Design/methodology/approach – The autoregressive distributed lag (ARDL) modelling approach to co‐integration is employed in order to estimate the influence of exchange rate variability on export demand. Findings – The empirical results indicate that foreign income and prices are important determinants of export demand for all of the five electrical exports, in both the long run and the short run, over the sample period 1990‐2001. More interestingly, this paper supports the view that exchange rate variability has an adverse effect on Malaysia's electrical exports. Research limitations/implications – One limitation of the study is the appropriateness of the ARDL modelling approach to examine the influence of exchange rate variability (which is stationary, I (0)) on trade behaviour such as export demand behaviour. Practical implications – This paper is important to policymakers for the design of both exchange rate and trade policies in order to promote export growth, which could lead to Malaysia's transition towards high‐technology industrialisation. Originality/value – This paper examines the influence of exchange rate variability on the demand for Malaysia's top five electrical exports as classified by SITC product groups, information which is not available in the existing literature.

Journal

Journal of Economic Studies – Emerald Publishing

Published: May 16, 2008

Keywords: Electrical goods; Exports; Exchange rates; Malaysia

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