Open AccessDOES THE SERVICE TRADE OPENNESS MITIGATE REAL EXCHANGE RATE VOLATILITY?
Author(s) -
Febrio Kacaribu,
Syahda Sabrina,
Teuku Muhammad Riefky Hasan
Publication year - 2021
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 4
ISSN - 2460-9196
DOI - 10.21098/bemp.v24i2.1168
Subject(s) - openness to experience , volatility (finance) , economics , monetary economics , exchange rate , volatility swap , panel data , econometrics , implied volatility , psychology , social psychology
This study examines the relationship between trade openness and exchange rate volatility. We use panel data of 52 countries and document trade openness has a negative and statistically significant effect on exchange rate volatility. The second explanatory variable considered in the model is money supply shock which is found to have a positive and statistically significant effect on exchange rate volatility. Our results survive battery of robustness checks.