Exchange rate sensitivity of commodity flows between the Philippines and the US

摘要

Previous studies that tried to assess the impact of exchange rate changes on the inpayments and outpayments of a country used aggregate trade flows between two countries. They are said to suffer from aggregation bias, and disaggregation by industry is recommended. In this paper, we consider response to exchange rate changes of export earnings (inpayments) of 133 industries that export from the US to the Philippines (Philippines' importing industries) and outpayments of 65 US industries (Philippines exporting industries) that import from the Philippines using annual data over the period 1973-2012. While in most industries exchange rate changes had significant effects in the short run, the short-run effects did not last into the long run in most industries. Economic activity played more role in the long run than the exchange rate.