to negative trend. Smooth movement of imports response starts in fiveth period ahead.
4. Indonesia Indonesia’s impulse response function will be shown in table and
graph. The test result can be seen below;
Indonesia seemingly has the same movement in response of exchange rate shock. However, Indonesia IRF test result shows the larger
trend of response. The export shows the negative trend in rensponse of exchange rate shocks, it is decreasing each period. While the import
variable showing a positive trend in response to the exchange rate shocks. In brief, Indonesia’s trade balance shows a huge impact on responding the
exchange rate shock, and has a slow response in countering the exchange rate shock effect duration. Means that, Indonesia still need to remanage
Indonesia exchange rate IRF Period
Export Import
1 0.000000 0.000000
3 -77.23881 42.73013
6 -106.8645 134.1069
9 -133.8334 196.0935
12 -153.6378 241.3071
15 -168.1494 274.5516
18 -178.8311 299.0219
21 -186.701
317.0453 24
-192.4997 330.3236 27
-196.7721 340.1067 30
-199.9201 347.3148
Figure 4.9 Indonesia IRF graph
-400 -200
200 400
600
2 4
6 8
10 12
14 16
18 20
22 24
26 28
30 Response of EXR to EXPT
-400 -200
200 400
600
2 4
6 8
10 12
14 16
18 20
22 24
26 28
30 Response of EXR to IMPT
Table 4.8 Indonesia IRF table
their trade balance performance and encourage their exchange rate instability to get sustainable economic condition.
5. Philippine The last is Phillipine impulse response function result to see the
impact on trade balance when exchange rate get shocked, the result can be seen below;
The findings above shows the response of Philippine trade balance variables towards exchange rate shocks. According to the table and figure
above, the export variable start the trend with positive and smooth response up to second period and having a negative response in the third
period. The response get stable in the fourht period ahead. Import varible starts the trend with positive response up to fourth period before it goes
down until hit the negative trend in the sixth period. The trend got stable in the sixth period ahead.
Figure 4.10 Philippine IRF graph
-.2 .0
.2 .4
.6 .8
1 2
3 4
5 6
7 8
9 10
Response of DEXR to DEXPT
-.2 .0
.2 .4
.6 .8
1 2
3 4
5 6
7 8
9 10
Response of DEXR to DIMPT
4.1.6 Variance Decomposition
Variance Decomposition shows the further relationship between variables. It showed the degree of effect caused by variables due to the shock occurs in the
research. The estimation result of five countries will be explained as a whole, the result table will be provided below;
Table 4.12 Variance Decomposition
Singapore Period
Position on EXR Position on EXPT
Position on IMPT EXR
EXPT IMP
EXR EXPT IMP
EXR EXPT
IMP
1 100.00
0.00 0.00 14.04 85.95
0.00 10.98 60.58 28.42 5
97.44 0.22
2.32 39.78 55.36 4.85 45.63 39.57 14.79
10 96.69
0.12 3.18 49.41 38.30 12.28 62.34 27.87
9.78 15
96.17 0.12
3.69 52.40 28.86 18.73 70.47 21.53 7.98
20 95.82
0.15 4.01 53.50 22.98 23.50 75.24 17.55
7.20 25
95.58 0.17
4.23 53.98 19.05 26.96 78.35 14.84 6.78
30 95.41
0.19 4.39 54.22 16.27 29.50 80.56 12.88
6.55
Malaysia Period
Position on EXR Position on EXPT
Position on IMPT EXR
EXPT IMP
EXR EXPT IMP
EXR EXPT
IMP
1 100.00
0.00 0.00
5.48 94.51
0.00 10.39 55.95 33.65 5
98.73 0.99
0.26 22.86 74.76 2.36 32.97 41.72 25.29
10 96.48
2.32 1.18 50.23 35.12 14.64 44.45 24.08 31.46
15 96.17
2.46 1.36 58.41 23.28 18.30 48.31 18.34 33.33
20 96.05
2.51 1.42 61.81 18.38 19.80 49.78 16.03 34.17
25 95.96
2.56 1.47 63.98 15.30 20.70 50.74 14.59 34.66
30 95.91
2.58 1.49 65.43 13.24 21.32 51.37 13.62 34.99
Thailand Period
Position on EXR Position on EXPT
Position on IMPT EXR
EXPT IMP
EXR EXPT IMP
EXR EXPT
IMP
1 100.00
0.00 0.00
2.86 97.13
0.00 0.81
27.02 72.16 5
96.72 1.64
1.63 5.76
87.81 6.42
2.43 36.80 60.75
10 92.62
4.78 2.59 24.15 66.04
9.80 5.47
32.83 61.68 15
90.89 6.16
2.94 34.29 54.97 10.73 6.99 31.20 61.80
20 90.00
6.87 3.12 39.86 48.84 11.29 7.76
30.34 61.88 25
89.44 7.32
3.23 43.48 44.86 11.65 8.25 29.88 61.94
30 89.05
7.62 3.31 46.01 42.07 11.91 8.58
29.43 61.97
Indonesia Period
Position on EXR Position on EXPT
Position on IMPT EXR
EXPT IMP
EXR EXPT IMP
EXR EXPT
IMP
1 100.00
0.00 0.00
0.92 99.07
0.00 0.75
42.72 56.52 5
93.97 3.24
2.77 4.92
94.33 0.74 6.819 61.41 31.76
10 82.40
6.46 11.13 4.10
93.07 2.81
5.78 76.67 17.53
15 71.73
8.91 19.34 3.24
91.08 5.66
4.31 83.27 12.41
20 63.61
10.62 25.76 2.63 89.16
8.20 3.25
85.53 11.23 25
57.68 11.80 30.50 2.20
87.58 10.20 2.54 86.07 11.38
30 53.34
12.64 34.01 1.91 86.33 11.75 2.06
85.98 11.94
Philippine Period
Position on EXR Position on EXPT
Position on IMPT EXR
EXPT IMP
EXR EXPT IMP
EXR EXPT
IMP
1 100.00
0.00 0.00
1.64 98.35
0.00 0.15
13.20 86.63 5
99.15 0.04
0.80 3.92
92.33 3.74
2.66 43.86 53.47
10 99.35
0.22 0.41
4.19 89.89
5.90 6.79
59.40 33.80 15
99.40 0.29
0.29 4.25
88.92 6.81
8.55 65.36 26.08
20 99.43
0.33 0.23
4.29 88.41
7.29 9.47
68.54 21.97 25
99.44 0.35
0.19 4.31
88.08 7.59 10.05 70.52 19.42
30 99.45
0.37 0.17
4.33 87.87
7.79 10.44 71.87 17.68
The findings shows the most influence variable due to the other variables. From the table above, the five countries have different pattern of result.
Singapore’s exchange rate variable in the first period is 100 then decreasing each period, until hit the point of 95 in the thirthy period. The exports of
Singapore are influenced by exchange rate at the point of 14 in the first period, while it decreasing extremely in the 30th period. Influenced by exchange rate
54 and import 29. Singapore’s import variable are influenced by two others in the first period, these are exchange rate 10 and export 60. The
rest is influenced by import variable itself. At the 30th period, the export and import variables decreasing extremely and letting exchange rate taking the place
in influencing the import variable. From the findings, exchange rate are mostly taking a huge part in influencing the others variables. Means that, Singapore trade
balance are fully conducted by its currency. Malaysia’s exchange rate variables are influenced by its own variable in the
first period. In the 30th period, export and import variables are influencing the exchange rate in the amount of 4. In this case, Malaysia’s exchange rate policy
is not really influenced by their trade balance variables. Malaysia’s export variable are influenced by exchange rate at the amount of 5 in the first period,
decreasing each period. at the 30th period, Malaysia’s export are mostly influenced by exchange rate 65 and then influenced by import 21.
Malaysia’s import is influenced by exchange rate 10 and export 55 which has the big influence on Malaysia import in the first period. In the 30th period,
Malaysia’s import are mostly influenced by exchange rate 51 rather than export 13. In conclusion, Malaysia’s trade balance are mostly conducted by it
is exchange rate as the Singapore does. From the finding above, Thailand’s exchange rate are little effected by their
trade balance variables export 7, import 3. Means that, their exchange rate variable are not really influenced by their trade balance. Thailand export has
influenced by exchange rate in the last period, eventhough their export variable
are still has a big influence for the variable itself. Thailand import are mainly influenced by it is own variable, then export and exchange rate are the second and
third most influence to the import variable. Indonesia exchange rate are influence by its import 34 rather than its
export 12, eventhough exchange rate variable itself has the bigger influence to it is own variable. Indonesia’s export seemingly most influenced by its own
variable rather than inport variable 11 in the 30th period and exchange rate has the smallest influence toward export variable 1.9 in the 30th period. Indonesia
import seemingly most influenced by export as well 85 in the 30th period. Means that, Indonesia trade balance are mostly influenced by export rather than
exchange rate. Philippine exchange rate are not really affected by trade balance variables,
Philippine export only influence at the amount 0.3 to the exchange rate in the 30th period, while import just influence the exchange rate at the amount 0.17
in the 30th period. Philippine export is also mostly influenced by its own variable, as the table show that exchange rate is only influence export at the amount 1.6
in the first period and 4 in the 30th period. Their import is only influence at the amount 7.7 at the 30th period. Philippine import variable is mostly influenced
by their export, as the table shows that in the first unltil 30th period, Philippine import are getting down each period while their export getting up. Their exchange
rate seemingly not too influence in controling Philippine trade balance variables.
