The effect of the exchange rate on industry-level trade flows in Czechia

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Show simple item record Šimáková, Jana Stavárek, Daniel
dc.contributor.other Ekonomická fakulta cs 2015-12-07 2015-12-07
dc.identifier.issn 12123609
dc.description.abstract This paper is the first study to use the disaggregated data of the Czech foreign trade to examine the effect of exchange rate levels and volatility on trade flows. Czechia is the appropriate economy to study this phenomenon because it is heavily involved in foreign trade predominantly owned by international investors and has been applying a floating exchange rate arrangement for many years. We analyze the period from 1993 to 2013 and disaggregate the data according to trading partner and product category. While the effect of exchange rate level is examined by a modified vector error correction model the effect of exchange rate volatility is analyzed through an extended gravity model. The detailed results obtained from empirical estimations clearly show that the relationship between exchange rates and foreign trade in Czechia does not completely correspond with the theoretical assumptions. We revealed that domestic currency depreciation worsens in the long-term trade balance in substantial parts of the Czech foreign trade, such as in the trade of machinery and transport equipment with Germany, Austria and France. The classical J-curve effect was confirmed only for the trading of beverages and tobacco with Italy and for the trading of manufactured goods with Slovakia. We also found that an increased exchange rate volatility does not necessarily reduce foreign trade turnover, as the results for crude materials, fuels, chemical and manufactured products indicate. By contrast, the theoretical expectation of negative impact of volatility was validated for machinery, transport equipment, food and animals. Therefore, although Czechia is a small, open economy, the exchange rate effects on foreign trade significantly differ in magnitude and direction across the trading partners and product groups. en
dc.format text
dc.format.extent 16 s. cs
dc.language.iso en
dc.publisher Technická Univerzita v Liberci cs
dc.publisher Technical university of Liberec, Czech Republic en
dc.relation.ispartof Ekonomie a Management cs
dc.relation.ispartof Economics and Management en
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dc.rights CC BY-NC
dc.subject SME sector en
dc.subject craft enterprise en
dc.subject financing en
dc.subject financing tools en
dc.subject management methods en
dc.subject financial engineering en
dc.subject outsourcing en
dc.subject virtual space en
dc.subject.classification F14
dc.subject.classification F31
dc.title The effect of the exchange rate on industry-level trade flows in Czechia en
dc.type Article en 2015-12-01
dc.publisher.abbreviation TUL
dc.relation.isrefereed true
dc.identifier.doi 10.15240/tul/001/2015-4-011
dc.identifier.eissn 2336-5604
local.relation.volume 18
local.relation.issue 4
local.relation.abbreviation E&M en
local.relation.abbreviation E+M cs
local.faculty Faculty of Economics
local.citation.spage 150
local.citation.epage 165
local.access open
local.fulltext yes

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