Bulletin of Monetary Economics and Banking


Mahyus Ekananda

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The purpose of this paper is to explain the uncertainty of exchange rate volatility effect to international trade. Its effect to international trade, specially quantity of export, come from accumulation exchange rate fluctuation from several lag. For the record, some previous researches which found out the impact of exchange rates on trade did not consider some of the things. First, the existence of inconstancy on trade. Namely, depend on the change of elasticity along the time of observations. Secondly, the number of lag in independent variable which is needed in order to record the highest impact. Third, there is an accumulation of impact in some previous period. The industry with lower import content become easier to maintain the export level. Export adjustment will occure with different time. This paper found that the industry with lower import content has faster export adjusment than higner import content. The data will separate into two different import content. The industry with higher import content will reduce the export if exchange rate volatility increase.The other purpose of this paper is to explain the algorithm solution for system equation which has non linier form in its parameter, especially in system equation of seemingly unrelated regression. Particularly, this paper will discuss the model formation by inserting poissons probability function, which cause the non linier form. Inserting poissons distibution probablity to equation of trade can estimate the time of adjustment that has a best distribution. Then, this paper will explain the implementation that had been done by Ekananda (2003) about poisons probability function on system equation, the dynamics of equation and the simultaneous equation by using Hausman algorithm (1975).Keywords: exchange rate, poisson distribution, Non Linear SURJEL: C16, C32, F14, F31

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Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License




University of Indonesia

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