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

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dc.contributor.authorŠimáková, Jana
dc.contributor.authorStavárek, Daniel
dc.contributor.otherEkonomická fakultacs
dc.date.accessioned2015-12-07
dc.date.available2015-12-07
dc.date.defense2015-12-01
dc.description.abstractThis 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.formattext
dc.format.extent16 s.cs
dc.identifier.doi10.15240/tul/001/2015-4-011
dc.identifier.eissn2336-5604
dc.identifier.issn12123609
dc.identifier.urihttps://dspace.tul.cz/handle/15240/13442
dc.language.isoen
dc.publisherTechnická Univerzita v Libercics
dc.publisherTechnical university of Liberec, Czech Republicen
dc.publisher.abbreviationTUL
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dc.relation.ispartofEkonomie a Managementcs
dc.relation.ispartofEconomics and Managementen
dc.relation.isrefereedtrue
dc.rightsCC BY-NC
dc.subjectSME sectoren
dc.subjectcraft enterpriseen
dc.subjectfinancingen
dc.subjectfinancing toolsen
dc.subjectmanagement methodsen
dc.subjectfinancial engineeringen
dc.subjectoutsourcingen
dc.subjectvirtual spaceen
dc.subject.classificationF14
dc.subject.classificationF31
dc.titleThe effect of the exchange rate on industry-level trade flows in Czechiaen
dc.typeArticleen
local.accessopen
local.citation.epage165
local.citation.spage150
local.facultyFaculty of Economics
local.fulltextyes
local.relation.abbreviationE&Men
local.relation.abbreviationE+Mcs
local.relation.issue4
local.relation.volume18
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