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Do exchange rate volatility and income affect Australia’s maritime export flows to Asia?


Chi, J and Cheng, SK, Do exchange rate volatility and income affect Australia's maritime export flows to Asia?, Transport Policy, 47 pp. 13-21. ISSN 0967-070X (2016) [Refereed Article]

Copyright Statement

Copyright 2015 Elsevier Ltd.

DOI: doi:10.1016/j.tranpol.2015.12.003


Given that existing literature does not explicitly take exchange rate volatility into account in an international maritime freight model, this paper attempts to examine the short- and long-run impacts of real income, bilateral exchange rate, and exchange rate volatility on Australia’s maritime export volume to its major Asian trading partners (China, Japan, Republic of Korea, Taiwan, India, Indonesia, and Malaysia). Using quarterly data for the period of 2000:Q1-2013:Q2, we include two measures of real exchange rate volatility (GARCH(1,1) and mean-adjusted relative change measures) for comparison purposes. The results show that real income is a crucial determinant of maritime export volume in both the short- and long-run, implying that Australia’s maritime exports are predominantly driven by the economic growth in its major Asian trading partners. This paper finds evidence that exchange rate volatility has a significant long-run effect in the majority of cases, suggesting that exchange rate volatility appears to be an important factor affecting maritime export volume. The effects of exchange rate volatility are found to vary across country-pairs, and hence confirming the importance of using disaggregate data to uncover the differential effects on maritime exports by country. This study also reveals that the two measures of exchange rate volatility can produce different effects and thereby, it is important to select an appropriate measure of exchange rate volatility.

Item Details

Item Type:Refereed Article
Keywords:Australia’s maritime export; ARDL approach; Asian trade flow; Bilateral exchange rate; Exchange rate volatility
Research Division:Economics
Research Group:Applied economics
Research Field:Applied economics not elsewhere classified
Objective Division:Economic Framework
Objective Group:Other economic framework
Objective Field:Other economic framework not elsewhere classified
UTAS Author:Cheng, SK (Dr Seu Keow Cheng)
ID Code:106833
Year Published:2016
Web of Science® Times Cited:13
Deposited By:TSBE
Deposited On:2016-02-23
Last Modified:2018-04-11

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