The Effects of Exchange Rate on Norway's Bilateral Trade Flow to the UK Via Maritime and Other Transport Modes: Does the 'Marshall-Lerner' Condition Hold?. Issue 2 (30th June 2020)

• Record Type: Journal Article
• Authors: Saeed, Naima
• Is Part Of: Journal of international logistics and trade. Volume 18:Issue 2(2020)
• Page Start: 61
• Page End: 76
• Publication Date: 2020-06-30
• Subjects: Maritime trade flow -- Real exchange rate -- Exchange rate volatility -- Real income -- Autoregressive distributed lag (ARDL) approach -- Marshall-Lerner condition; International trade -- Periodicals; Business logistics -- Periodicals; Commerce international -- Périodiques; Logistique (Organisation) -- Périodiques; Business logistics; International trade; Periodicals; 382.05
• DOI: 10.24006/jilt.2020.18.2.061
• Languages: English
• ISSNs: 1738-2122

Abstract

Abstract : This paper analyzes the impact of macroeconomic variables such as real exchange rate, exchange-rate volatility, and economic growth of the UK and Norway on Norway's bilateral trade flow to the UK via maritime and other transport modes. The first two models considered trade volume (import and export) via only maritime transport, while the third and fourth models considered trade volume via modes other than maritime transport. The empirical validity of the Marshall-Lerner condition is tested to see whether a devaluation of the real exchange rate improves the trade balance in the long term. In addition to the long-term relationship among variables, short-term effects are also evaluated. The results show that the real income of Norway and its trading partner (the UK) is the main determinant of bilateral trade flow via maritime and other transport modes. Moreover, the results indicate that in the long run, the Marshall-Lerner condition is satisfied only for bilateral trade via modes other than maritime transport.