Beschreibung:
This study examines the asymmetric effects of exchange rate on Vietnam’s trade balance. Data used in this study consist of monthly trade balance, exchange rate and industrial production index series over the period from January 2010 to June 2020. Using the nonlinear autoregressive distributed lag (ARDL) bounds testing approach, the empirical findings confirm that the exchange rate has asymmetric effects on trade balance in both the long-run and short-run, meaning that a decrease in exchange rate has the different effect on trade balance as an increase in exchange rate with the same size. Specifically, in the short-run, one percent increase in the exchange rate is associated with 3.1 percent decrease in the trade balance, while one percent decrease in the exchange rate results in 2.5 percent increase in the trade balance. In the long-run, one percent increase in the exchange rate results in 0.9 percent increase in the trade balance, while one percent decrease in the exchange rate leads to 2.8 percent decrease in the trade balance. Moreover, the results derived from the error correction model (ECM) indicate that 88.5% of the disequilibria from the previous month are converged and corrected back to the long-run equilibrium in the current month