Published : 2021-06-30

The exchange rate as a determinant of the development of foreign trade in the agri-food industry in the Visegrad region

Abstract

The majority of empirical studies assume the symmetric effects of exchange rate development on the trade balance. However, we follow more recent studies to show that there are distinctions to be made between the directions of changes inthe exchange rate. In this study, we assume that the effects can be asymmetrical in certain branches of the agri-food industry. This paper aims to evaluate the asymmetric effects of the exchange rate on foreign trade in the agri-food sector in the Visegrad region. For this purpose, we employ a non-linear auto regressive distributed lag approach to incorporate the assumed asymmetries of exchange rate changes in a model of the J-curve pattern in the case of Czechia, Hungary, and Poland.The dataset on the SITC two-digit level covers the period between 2000 and 2018. The paper shows that there is a clear difference in the effects of appreciation and depreciation. The difference is not only in the direction, but also in the intensity, of the effects of exchange rate changes on the trade balances of food and live animals, dairy products and birds’ eggs, and animal oils and fats in Czechia; meat and preparations in Hungary; sugar, sugar preparations and honey and beverages in Poland.

Keywords:

Agri-food sector, asymmetric effects, exchange rate, foreign trade, J-curve



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Šimáková, J. (2021). The exchange rate as a determinant of the development of foreign trade in the agri-food industry in the Visegrad region. Forum Scientiae Oeconomia, 9(2), 5–21. https://doi.org/10.23762/FSO_VOL9_NO2_1

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