The Effects of Exchange Rate Volatility on Export Demand for Apple and Potato (The Main Developing Producer and Exporting Countries)

Falahi, M.A.; Homayounifar, M.; Yavari, Z.

doi:10.22067/jead2.v0i0.29539

The Effects of Exchange Rate Volatility on Export Demand for Apple and Potato (The Main Developing Producer and Exporting Countries)

Document Type : Research Article

Authors

M.A. Falahi

M. Homayounifar

Z. Yavari

Economics Department, Ferdowsi University of Mashhad

https://doi.org/10.22067/jead2.v0i0.29539

Abstract

As the world trade is growing, exchange rate acts as a bridge between different economies and its volatility can affect price level, output, exports and imports. The purpose of this study is to investigate the effects of real exchange rate volatility on the export demand for the two products of apple and potato in the nine developing counteries of producing and exporting the two products during the period of 1992-2009 years.To achieve the goal, using Autoregressive Conditional Heteroskedasticity (ARCH) model, the real exchange rate volatility was estimated. Then the effects of exchange rate volatility on the export demand for apple and potato were analysed based on the panel data approach. The results indicate positive effects of real exchange rate and negative effects of real exchange rate volatility on the export demand. The weighted average income of importing countries has a positive effect and the relative export price of apple and potato has a negative effect on the export demand.

Keywords

Exchange rate volatility

Export demand

Apple and potato

ARCH model

Panel data JEL: F31

Q17 Classification