Exchange Rate Volatility, the E.U. and Sectoral Exports: New Empirical Evidence from the Chemical Sector (1973-2005)

Abstract

This paper examines potential effect of exchange rate volatility for a set of eleven E.U. member countries (Austria Belgium, Denmark, France, Finland, Italy, Portugal, Greece, Netherlands, the U.K. and Sweden) for sectoral trade exports for two products belonging to the chemical sector during the period of 1973-2005. We examine the effects of exchange rate volatility by utilizing a measure of the standard deviation of the moving average of the logarithm of real exchange rate as a measure of exchange rate volatility. Overall our results have proved to be consistent with our past examinations which for the main part did estimate some small sectoral effects from volatility to exports. Further more the results of our estimation suggest a mixed relationship of volatility to trade.