Date of Award

4-2026

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Khemraj, Tarron

Area of Concentration

Quantitative Economics

Abstract

This thesis examines the effects of nominal exchange rate volatility on Colombia’s export volumes to the United States, with emphasis on sectoral heterogeneity across agricultural and energy products. While exchange rate movements are widely recognized as an important determinant of trade performance, empirical evidence on the role of exchange rate volatility remains mixed, particularly for developing economies. This study contributes to the literature by distinguishing between exchange rate uncertainty and exchange rate level effects and by adopting a product-level time-series approach. Using monthly data from 2016 to 2024, the analysis focuses on four major Colombian exports: coffee, cut flowers, crude petroleum, and refined petroleum. Exchange rate volatility is measured as the conditional standard deviation from a GARCH(1,1) model estimated on the log returns of nominal COP/USD. Export volumes are obtained from U.S. import-reported trade data. Separate regressions are estimated for each product, allowing the effects of exchange rate volatility, exchange rate levels, and U.S. demand conditions to vary across sectors with distinct pricing mechanisms, contract structures, and exposure to currency risk. The results reveal substantial heterogeneity. Exchange rate volatility has a negative and statistically significant effect on coffee exports, consistent with risk aversion and limited hedging capacity among agricultural producers. In contrast, volatility does not significantly affect cut flower or energy exports. Exchange rate levels significantly influence crude and refined petroleum exports, while U.S. demand conditions play a central role in driving cut flower shipments. Overall, the findings highlight the importance of product-level analysis when assessing the trade effects of exchange rate movements in developing economies.

Rights

The author has granted New College of Florida the nonexclusive right to archive, make accessible, and distribute for educational purposes this work in whole or in part in all forms of media, now or hereafter known. The copyright of this work remains with the author.

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