A gravity analysis of Vietnam trade flows: Does the exchange rate matter?
Main Article Content
Abstract
Over the past decades, Vietnam has increased trade volume and expanded its trade partners. It is often argued that the exchange rate policy should be revised to improve international trade. By applying the gravity model with international trade data between Vietnam and her world partners, this study shows that exchange rate devaluation may not help. More important is to have a more flexible exchange rate and to upgrade domestic production capacity as well as to implement structure reform.
Article Details
Keywords
International trade, Exchange rate, Gravity model
References
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3. Baldwin, Richard and Daria Taglioni. (2006) “Gravity for Dummies and Dummies for Gravity Equations.” NBER Working Paper 12516. Available at http://www.nber.org/papers/w12516 (accessed May 10, 2012)
4. Baron, David P. (1976)”Flexible Exchange Rates, Forward Markets, and the Level of Trade.” American Economic Review 66, no. 3: 253-266.
5. Bergstrand, Jeffrey H. (1985)”The Gravity Equation in International Trade: Some Microeconomic Foundations and Empirical Evidence.” Review Of Economics And Statistics 67, no. 3: 474-481.
6. Bergstrand, Jeffrey H. (1989) “The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade.” Review Of Economics And Statistics 71, no. 1: 143153. EconLit with Full Text, EBSCOhost (accessed May 2, 2012).
7. Caporale, Tony, and KhosrowDoroodian. (1994)”Exchange Rate Variability and the Flow of International Trade.” Economics Letters 46, no. 1: 49-54.
8. Chit, Myint Moe, Marian Rizov, and Dirk Willenbockel. (2010) “Exchange Rate Volatility and Exports: New Empirical Evidence from the Emerging East Asian Economies.” World Economy 33, no. 2: 239-263. EconLit with Full Text, EBSCOhost (accessed May 2, 2012).
9. Coric, Bruno, and Geoff Pugh. (2010) “The Effects of Exchange Rate Variability on International Trade: A Meta-regression Analysis.” Applied Economics 42, no. 19-21: 2631-2644. EconLit with Full Text, EBSCOhost (accessed May 3, 2012).
10. Cyrus, Teresa L. (2002)”Income in the Gravity Model of Bilateral Trade: Does Endogeneity Matter?.” International Trade Journal 16, no. 2: 161-180.
11. De Grauwe, Paul. (1988)”Exchange Rate Variability and the Slowdown in Growth of International Trade.” International Monetary Fund Staff Papers 35, no. 1: 63-84.
12. Deardorff, Alan V. (1998) “Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?.” In The regionalization of the world economy, 7-22. NBER Project Report series. 1998. NBER database (accessed May 2, 2012)
13. Dell’Ariccia, Giovanni. (1999)”Exchange Rate Fluctuations and Trade Flows: Evidence from the European Union.” IMF Staff Papers 46, no. 3: 315-334.
14. Egger, Peter. (2002) “An Econometric View on the Estimation of Gravity Models and the Calculation of Trade Potentials.” World Economy 25, no. 2: 297-312. EconLit with Full Text, EBSCOhost (accessed May 2, 2012).
15. Feenstra, Robert C., James R. Markusen and Andrew K. Rose. (2001)“Using the Gravity Equation to Differentiate among Alternative Theories of Trade.” The Canadian Journal of Economics / Revue canadienned’Economique 34, no. 2: 430-447.
16. Feenstra, Robert C. (2004) Advanced International Trade: Theory and Evidence. Princeton and Oxford: Princeton University Press.
17. Frankel, Jeffrey A., and Shang-Jin Wei. (1998)”Regionalization of World Trade and Currencies: Economics and Politics.” In The regionalization of the world economy, 189-219. NBER Project Report series.
18. Hudson, Alexandra, and Bas Straathof. (2010) “The Declining Impact of Exchange Rate Volatility on Trade.” De Economist 158, no. 4: 361-372. EconLit with Full Text, EBSCOhost (accessed May 22, 2012).
19. Kennedy, Peter. (2008) A Guide to Econometrics. 6th edition. Oxford: Blackwell Publishing.
20. Klaassen, Franc. (2004) “Why Is It So Difficult to Find an Effect of Exchange Rate Risk on Trade?.” Journal Of International Money And Finance 23, no. 5: 817-839. ScienceDirect (accessed May 23, 2012).
21. Melitz, Jacques. (2007)”North, South and Distance in the Gravity Model.” European Economic Review 51, no. 4: 971-991.
22. Ozturk, Ilhan. (2006) “Exchange Rate Volatility and Trade: A Literature Survey.” International Journal of Applied Econometrics and Quantitative Studies 3, no. 1: 85-102, Available at http://www.usc.es/economet/ reviews/ijaeqs315.pdf (accessed April 02, 2012)
23. Sastre, Luis. (2012) “Simultaneity between export and import flows and the Marshall–Lerner condition.” Economic Modelling 29: 879–883. ScienceDirect (accessed May 20, 2012)
24. Sercu, Piet, and Raman Uppal. (2003) “Exchange Rate Volatility and International Trade: A GeneralEquilibrium Analysis.” European Economic Review 47, no. 3: 429-441. ScienceDirect (accessed May 23, 2012).
25. Soloaga, Isidro, and L. Alan Winters. (2001)”Regionalism in the Nineties: What Effect on Trade?.” North American Journal Of Economics And Finance 12, no. 1: 1-29.
26. Stern, Robert M. (2007) Balance of Payments: Theory and Economic Policy. AldineTransaction. New Brunswick (U.S.A.) and London (U.K.).
27. Tinbergen, Jan. (1962) Shaping the World Economy; Suggestions for an International Economic Policy. Twentieth Century Fund, New York. Available at http://repub.eur.nl/res/pub/16826/(accessed April 20, 2012)
28. Zhang, Yanhong, Hui S. Chang, and Jean Gauger. (2006) «The Threshold Effect of Exchange Rate Volatility on Trade Volume: Evidence from G-7 Countries.» International Economic Journal 20, no. 4: 461-476. EconLit with Full Text, EBSCOhost (accessed May 5, 2012)