The impact of exchange rate volatility on UK exports to EU countries

Glauco De Vita, Andrew Abbott

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Abstract

This paper investigates the impact of exchange rate volatility on UK exports to European Union (EU) countries by means of a newly developed ARDL bounds testing procedure to cointegration. Using monthly data disaggregated by market of destination and sectors for the period 1993ml to 2001m6, our results indicate that UK exports to the EU14, at both aggregate and sectoral level, are generally income elastic, relative price inelastic and largely unaffected by short-term exchange rate volatility. Re-estimation of the model using a long-term measure of volatility, however, provides evidence supporting the hypothesis that exchange rate uncertainty has a negative and significant influence on UK exports to EU countries.
Original languageEnglish
Pages (from-to)62-81
Number of pages20
JournalScottish Journal of Political Economy
Volume51
Issue number1
Early online date20 Jan 2004
DOIs
Publication statusPublished - Feb 2004

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