Abstract
The cessation of the Bretton Woods Monetary System of fixed parities, which has led to the adoption of floating regimes by many economies since 1973, has occasioned wide unpredictable fluctuations in bilateral exchange rates. These erratic movements spark interest in exchange rates, owing to the perceived adverse effects on international trade. The traditional school of thought holds that by intensifying the risk associated with cross-border exchanges, fluctuations in exchange rates may dampen the volume of international trade, as risk-averse traders substitute away from their high-risk trading obligations, towards less risky ones. The risk-portfolio stance, however, counters this traditional view, with the conjecture that higher risk implies higher returns, thus, increasing risk due to fluctuating exchange rates could in fact increase the volume of trade. Aligning with the theoretical framework of the risk-averse stance, this paper empirically assesses the impact of exchange rate volatility on Indian agricultural trade in the post Liberalization, Privatization and Globalization (LPG) reform era, between 1990- 2019. Moving standard deviation and GARCH measures of exchange rate volatility are used in the empirical regression models, that are built on the theoretical foundations of the Gravity Model of Trade. Implications of the results discuss the possible impact of this relationship on bilateral trade policies and domestic and international food security.
Advisor
Moledina, Amyaz
Department
Economics
Recommended Citation
Chiripal, Sukriti, "The Impact of Exchange Rate Volatility on International Trade: A Study of Indian Agricultural Trade in the Post Liberalization, Privatization And Globalization Era, between 1990-2019." (2024). Senior Independent Study Theses. Paper 10980.
https://openworks.wooster.edu/independentstudy/10980
Disciplines
Agribusiness | Agricultural and Resource Economics | Food Security | International Economics | Macroeconomics | Political Economy
Keywords
Exchange Rates, Volatility, International Trade, Agriculture, Food Security
Publication Date
2024
Degree Granted
Bachelor of Arts
Document Type
Senior Independent Study Thesis
© Copyright 2024 Sukriti Chiripal
