Thailand-China commodity trade and exchange rate uncertainty: Asymmetric evidence from 45 industries

Abstract

Abstract Assessing the short-run and long-run effects of exchange rate uncertainty on trade flows since 2017 has taken a new direction by engaging in asymmetry analysis. In this paper we add to this emerging literature by estimating both linear and nonlinear ARDL export and import demand models for each of the 45 industries that trade between Thailand and China. Estimates of the linear models revealed that exchange rate uncertainty has short-run effects on 22 Thai exporting and 32 Thai importing industries. However, the nonlinear model revealed that exchange rate uncertainty has short-run asymmetric effects on the trade flows of almost all industries. Short-run asymmetric effects lasted into long-run asymmetric effects in 50% of the industries.