The Effects of Exchange Rate Volatility on Exports: Evidence from China

This paper empirically investigates the impact of the exchange rate volatility on the real export flows of China by using quarterly data from 1995Q1 to 2010Q1. Co-integration and error-correction models are employed to obtain the estimates of the long run equilibrium and the short-run dynamics, respectively. Our results concerning the effects of exchange rate volatility on real exports suggest that the long-run relationship between China´s real exports and its bilateral real exchange rate volatility is negative and statistically significant, but the short-run impact of the exchange rate volatility is insignificantly positive.