Does the Exchange Rate-Trade Nexus Vary Across Manufacturing Industries?
Does the Exchange Rate-Trade Nexus Vary Across Manufacturing Industries?
Author(s): Saharnaz Damirova, Duygu Yolcu KaradamSubject(s): Supranational / Global Economy, Business Economy / Management, International relations/trade, Financial Markets, Socio-Economic Research
Published by: Kafkas Üniversitesi Sağlık, Kültür ve Spor Daire Başkanlığı Dijital Baskı Merkezi
Keywords: Exchange rate; manufacturing industry trade; gravity model;
Summary/Abstract: This study examines how bilateral trade responses of manufacturing industries to exchange rate (ER) movements differ across sectors and over time. To this end, we estimate the impact of both ER levels and uncertainty on manufacturing industry exports employing an industry level analysis. The gravity model estimation results indicate that real exchange rate (RER) depreciations increase total manufacturing exports. However, the direction and magnitude of these effects vary substantially across sectors and over time. The effects of RER depreciations become statistically insignificant or even reverse in technology-intensive sectors and in sectors with high foreign value-added content in exports. Our findings reveal that ER volatility negatively affects exports in most of the manufacturing industries. Sub-period analyses show that the results for the 1990-2005 period are consistent with conventional trade channel, whereas the ER-trade relationship weakens or reverses in many sectors during the 2006-2021 period.
Journal: Kafkas Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi
- Issue Year: 17/2026
- Issue No: 33
- Page Range: 411-440
- Page Count: 30
- Language: English
