The South Africa‐U.S. Trade and the Real Exchange Rate: Asymmetric Evidence from 25 Industries

Abstract

Abstract Previous studies that assessed the effects of exchange rate changes on the trade balance of South Africa assumed that the effects are symmetric. In this paper we violate that assumption and assess the asymmetric effects of the real rand‐dollar rate on the trade balance of 25 2‐digit industries that trade between South Africa and the U.S. We find short‐run asymmetric effects in a total of 19 industries but short‐run cumulative or impact asymmetric effects only on five industries. Short‐run asymmetric effects lasted into long‐run asymmetric effects on 14 industries. Further analysis revealed industries that will benefit from rand depreciation and those that will be hurt from rand appreciation.

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