taxes housing and capital accumulation in a two sector growing economy abstract it is sometimes argued that the favorable tax treatment afforded to housing may lead to an oversupply of housing at the expense of capital this issue is examined in the context of a growing two sector economy in the basic model where the rate of time preference is constant and labor is instantaneously sectorally mobile the long run response of the capital stock to a tax on housing depends upon the relative capital intensities of the two sectors while the long run relative asset price of housing remains unchanged the robustness of these propositions to changes in the model are considered taxes on capital are also analyzed

purchasing power parity based on effective exchange rate and cointegration 25 ldcs experience with its absolute formulation abstract with the development of cointegration technique the purchasing power parity ppp theory has received renewed attention most studies have tested the theory by using data from developed countries dcs and some high inflation less developed countries ldcs they have mostly rejected its empirical validity in this paper we use the concept of effective exchange rate and quarterly data over 1973 1988 to examine the experience of 25 ldcs for most countries we found little empirical support for the ppp

the j curve effect and the u s agricultural trade balance according to the j curve theory following a currency depreciation there will be an initial deterioration of the trade balance before an improvement is realized this paper finds empirical evidence indicating the first segment of the j curve does exist for the u s agricultural trade balance a 10 depreciation of the u s dollar is estimated to lead a deterioration of the agricultural trade balance that will last for about nine months

devaluation and the j curve some evidence from ldcs within the international trade literature it is not uncommon to find arguments about whether devaluation will improve the trade balance it is argued that the flows of goods respond only with time lags to changes in the exchange rate the j curve terrn is used to describe the movement over time of the trade balance it may deteriorate at first and improvement may come later this paper presents a method by which one could detect the existence of the j curve the method is applied to four developing countries the empirical evidence supports the pattern of movemnent described by the j curve a major policy option for a country facing a persistent balance of payments deficit is said to be devaluation of its currency within the international trade literature it is not uncommon to find arguments about whether devaluation will improve the trade balance or the balance of payments for example proponents of the elasticities approach describe the necessary and sufficient conditions for an improvement in the trade balance in terms of elasticities of demand and supply referred to as the marshall lerner condition while there is abundant empirical evidence to suggest that these conditions are indeed met at least for industrial countries there have been circumstances under which 2 devaluation has not been successful for example one might wonder why the u s trade balance deteriorated so much in 1972 despite the devaluation of the dollar in 1971 this unfavorable effect of devaluation on the trade balance is termed the j curve phenomenon received for publication august 23 1984 revision accepted for publication november 26 1984 the university of wisconsin milwaukee i would like to thank two anonymous referees for their valuable comments on the initial draft of this paper 1 proponents of the absorption approach e g alexander 1952 describe how devaluation may change the terms of trade increase production and switch expenditures from foreign to domestic goods thus improving the trade balance international monetarists argue that devaluation reduces the real value of cash balances and or changes the relative price of traded and nontraded goods thus improving both the trade balance and the balance of payments 2 for an cstimate of the elasticities see houthakker and magee 1969 and warner and kreinin 1983 the former study provides the elasticities estimates under fixed exchange rates and the latter under floating rates this content downloaded from 157 55 39 17 on wed 31 aug 2016 04 39 37 utc all use subject to http about jstor org terms

the j curve in the emerging economies of eastern europe devaluation or depreciation of a currency worsens the trade balance before improving it resulting in a j curve pattern a new definition of the hypothesis implies a short run deterioration combined with the long run improvement by using monthly data over the january 1990 june 2005 period from 11 east european emerging economies most of which are the new european union eu members or the eu candidate countries this article uses the bounds testing approach to cointegration and error correction modelling and finds empirical support for the j curve hypothesis in three countries of bulgaria croatia and russia the results have important implications for policymakers involved in economics in terms of using exchange rate policy as a policy device to achieve real convergence toward eu standards

empirical investigation of one opec country s successful non oil export performance abstract this study examines indonesian non oil export success between 1975 and 1994 with a focus on the role of exchange rate management and trade policy in export performance across sectors to examine the link between export quantity and changes in policy i estimate structural export supply functions that are derived from utility and profit maximization behavior the results indicate that non oil exporters respond positively to improved price incentives including exchange rate devaluation with the strongest impact in textiles garments and sawnwood the study offers a richer description than previous work of the relationship between price incentives and export performance

a cost function analysis of import demand for nigeria the article uses a translog cost function to examine the substitution relations among capital labour and imports the results show that capital has a substitute relation with domestic labour and import however labour and import have complementary relationship the implication of this finding is that liberalization policies if pursued vigorously could impart positively on the demand for labour in addition it suggests that economic growth could be enhanced through trade liberalization

effects of exchange rate risk on exports crosscountry analysis abstract in this paper we investigate the effects of exchange rate uncertainty on the aggregate exports of 19 developed and 67 developing countries using cross sectional data exchange rate uncertainty is found to be detrimental to the exports of both developing and developed countries developed countries exports however are found to be less sensitive to exchange risk than that of developing countries furthermore within the developing countries those who fixed their exchange rates to one major currency were found to be subject to less risk than the other developing countries

determinants of international trade flows this paper models and estimates import demand and demand for export functions for 19 industrial countries although primary emphasis is placed on the period of generalized floating exchange rates 1972 through 1980 estimates are also provided for the fixed exchange rate years 1957 1970 thus making possible a comparison between the two eras aside from the conventional income and price variables the paper assesses the effect of variations in the exchange rate and in the expected exchange rate on real trade flows additionally it estimates an unrestricted lag structure of the effect of price and exchange rate variations on imports

the political economy of tariff protection in china evidence from the wto accession we analyze china s tariff rates at wto accession using a political economy approach a model drawing on branstetter and feenstra 2002 is used to derive an optimal tariff rate for each industry the model predicts that a government would set a high tariff rate if an industry is of large state owned enterprise soe share multinational share or small foreign import share from the model we reveal the chinese government s preference towards different interest groups under the binding tariff constraint from the wto commitments the estimated structural parameters imply that the political weights on both the soe profits and consumer income diminish with the economic opening more important the government still favours soes over consumer income our findings are consistent with the special features of china s economy economie politique de la protection tarifaire en chine resultats derives de l accession a l omc l auteur analyse a l aide d une approche d economie politique les droits de douane de la chine lors de son accession a l office mondial du commerce un modele s inspirant de branstetter feenstra 2002 est utilise pour deriver un droit de douane optimal pour chaque industrie le modele predit qu un gouvernement va fixer un droit de douane eleve si l industrie est soit partie du grand secteur des entreprises d etat ee du secteur des multinationales ou du secteur ou l importation est peu importante on revele les preferences du gouvernement chinois entre les divers groupes d interets face aux contraintes imposees par les engagements vis a vis l office mondial du commerce les parametres structurels calibres impliquent que le poids politique a la fois des profits des ee et des revenus des consommateurs diminue quand il y a liberalisation du commerce plus important peut etre le gouvernement favorise toujours les profits des ee plutot que le revenu des consommateurs ces resultats s arriment bien aux caracteristiques speciales de l economie chinoise

long run price elasticities and the marshall lerner condition revisited abstract in estimating trade elasticities most previous researchers employed nonstationary data and ols or 2sls method with new developments in the literature this paper uses stationary data and johansen s cointegration analysis to provide new trade elasticities for almost 30 countries

bilateral j curve between india and her trading partners india a land of over one billion people and one of the newly emerging industrial powers in the world is going through a slow but steady metamorphism for centuries india has played a major role in the international trade it was not uncommon to see her ships carrying silk and spices across the arabian seas and bringing back machine made textile invasions of india first by mughals and latter by the british through the east india company were all trade oriented india s presence in the world trade is relatively small at this time but is gaining momentum after independence in 1947 india for a brief period experimented with socialism the five year plans were mainly focused towards building infrastructure and development of small scale agriculture based industries the industrial development even though extremely important for growth played a secondary role the foreign investment was encouraged but only in the selected sectors of the economy however threat of nationalization a large bureaucracy corruption lack of understanding of the indian business practices and the requirement that a major share holder must be an indian national discouraged foreign capital investment in india during 1991 1992 india adopted a policy of trade liberalization to attract foreign capital and to encourage non resident indians to invest in their home country government of india established a separate unit within the home ministry whose main function was to expedite processing of applications india also relaxed the requirement that a major partner be an indian national india provided export subsidies to the exporters in terms of cash as well as foreign exchange so that they could import machines and raw materials exports responded to the trade liberalization and increased from 44 041 crores of rupees in 1991 1992 to 141 603 crores in 1998 1999 where one crore is equivalent to ten million in us dollar terms at a current exchange rate of 42 48 rupees per dollar this translates to an increase from 10 37 billion to 33 34 billion over eight years india also anticipates that through a major increase in the information technology mainly software industry her exports will increase to 90 billion by 2005 the trade liberalization has been accompanied by changes in the monetary policies the inflation rate has been reduced from about 12 to 9 per year the interest rates have declined from 14 to 10 and the exchange rate has been allowed to respond to market forces as a result from 1991 1992 to 1998 1999 the rupee has declined from 19 62 rupees per dollar to 42 48 rupees per dollar by december 2000 rupee had further devalued to 46 25 per dollar with a hope that it will further boost india s exports and improve her trade balance however the impact of currency depreciation on the trade balance is not instantaneous indeed there is ample evidence in the literature that after currency depreciation the trade balance worsens in the short run before improving in the long run since this pattern of movement of the trade balance over time resembles the letter j magee 1973 labelled it the j curve phenomenon magee argued that after devaluation contracts that are in transit at old exchange rates dominate the short run response of the trade balance over time new contracts at new prices begin to exert their favourable impact at this stage elasticities may increase leading to an eventual improvement in the trade balance of course the delayed response could also be due to lags in the process of increasing the production of exportables junz and rhomberg 1973 have identified five lags namely recognition lags decision lags delivery lags replacement lags and production lags only after the realization of these lags the trade balance could improve early studies that tried to investigate the impact of currency depreciation on the trade balance relied upon estimating the marshall lerner condition the condition

an asymmetric analysis of the j curve effect in the commodity trade between china and the us this paper follows a non linear ardl error correction approach to examine the presence of the j curve in the commodity level trade between the united states and china the analysis disaggregates the us china trade flows by commodities and separately examines the trade balance responses of 97 commodities to the changes in the real yuan us exchange rates the analysis at the commodity level alleviates potential aggregation bias that is present in earlier studies offering little evidence for long run asymmetric effects of exchange rate on the china us trade balance we find strong support for short run asymmetric effects in the case of two third of the commodities whereas significant long run asymmetric effects are present in the case of one third of the commodities including those commodities which command large shares in the china us trade

same currency different strategies the role of the exchange rate in shaping european agri food exports abstractthis article uses a nonlinear autoregressive distributed lag nadrl model introduced by shin yu and greenwood nimmo 2014 to assess the role that the exchange rate plays in shaping european agri food exports after the introduction of the euro although the 10 countries of this study share the same currency and thus a single nominal exchange rate with the us cross country discrepancies of exports reactions to exchange rate changes are evident moreover i find that exchange rate changes influence exports asymmetrically in the long run euro appreciations are harmful to a lesser extent than euro depreciations are beneficial for european agri food exports the magnitude of this effect is country specific and varies considerably between individual exporting countries exported quantities are less affected by exchange rate fluctuations than export values which is in line with local currency price stabilization strategies of the exporters this finding is interpreted as a sign of an incomplete

demand for international reserves corrections for serial correlation and heteroscedasticity 1987 demand for international reserves corrections for serial correlation and heteroscedasticity applied economics vol 19 no 5 pp 609 618

brazil us commodity trade and the j curve currency devaluation or depreciation is said to temporarily worsen a country s trade balance and improve it later an effect that is called the j curve previous research that tested the j curve for brazil used the country s aggregate trade flows with the rest of the world and did not find support for the phenomenon in this article we consider the trade flows between brazil and a major trading partner the united states disaggregating their trade flows by commodity we then test the empirical validity of the j curve for each of the 92 industries that trade between the two countries we find support for the phenomenon in 31 industries therefore disaggregation by industry seems to yield some support for the phenomenon

effects of exchange rate flexibility on the demand for international reserves abstract we incorporate a measure of exchange rate flexibility into the standard reserve demand equation and present empirical results for the 1976 1985 period which are consistent with the work of officer 1976 and frenkel and jovanovic 1981 indicating the existence of economies of scale and the demand for reserves

determinants of international trade flows the case of developing countries abstract the question of magnitude and the time path of the trade flows to changes in the exchange rates and to changes in the price level is of emitent practical importance to assess the above proposition a distributed lag structure is imposed on the relative prices and on the effective exchange rate as the determinants of trade flows then import and export demand functions are estimated for a sample of developing countries using the almon procedure the empirical findings appeared to sustain orcutt s early conjecture that trade flows adjust differently to different price stimuli more precisely it was found that imports and exports reactions were quicker and the total response time was shorter when an exchange rate rather than relative prices caused a change in international prices

kalman filter approach to estimate the demand for international reserves a few studies have provided empirical support for the fact that the demand for international reserves experienced structural instability in 1973 and 1979 due to a change in exchange rate system and oil price shocks thus under the current managed float due to exchange rate and oil price fluctuations coefficient estimates could be time dependent after showing that indeed estimated coefficients are time dependent the kalman filter estimation method is employed and the reserve demand function for 19 industrial countries estimated the kalman filter approach incorporates the time varying properties of coefficients estimates

will developing country debt forgiveness increase agricultural trade abstract latin american countries are important customers in international agricultural trade however between 1981 and 1987 u s agricultural exports to these countries declined by almost 50 one explanation for the above decrease is the change in financial conditions facing many countries in this region outstanding debt in the latin american countries continued to rise through the 1980 s reaching over 120 billion for brazil and mexico by 1987 in this paper we develop an import model which considers the effect of the debt crisis on the ability of developing countries to purchase agricultural commodities in world markets we estimate the model for four countries mexico brazil chile and venezuela the estimated results are used in a simulation model to obtain the effects of a 50 debt forgiveness scenario results indicate only a modest improvement in agricultural imports of the four latin american countries considered in this study these four countries would expand agricultural imports by 400 million per annum given the debt reduction

asymmetric j curve evidence from industry trade between u s and u k previous research that assessed the impact of exchange rate changes on the trade balance between the u s and u k assumed the effects are symmetric in this paper we add to the literature on the

regional development or resource preservation a perspective from japanese appliance exports abstract this paper examines japanese resource outflows in the form of exported used and functional products in 2007 by quantifying the unintentional metal exports for a number of specialty metals typically used in electronics and electrical equipment we find that more than half of the indium and 20 30 of the barium lead antimony strontium zirconium silver gold and tin in domestically discarded products were not recycled in japan but rather were exported in products to be used elsewhere the destinations of these metals were mainly asian countries with rudimentary recycling technology these results demonstrate that although these metals could have been stockpiled domestically for future recovery and recycling they were instead sent to countries where recycling of these scarce metals is unlikely from a resource perspective therefore the free trade of used japanese products compromises long term domestic resource availability as it increases the quality of life in developing countries

exiting behavior under tiebout conditions towards a predictive model the paper briefly reviews recent research that adapts and extends the tiebout model of residential choice paying special attention to those studies which utilize hirschman s exit voice and loyalty model the paper argues that these are theoretically and empirically flawed since they do not take account of tiebout rational intra jurisdictional moves but concentrate upon potential exiting behavior the article then tests the importance of the inter intra jurisdictional distinction using a logit model of factors using data from the 1990 economic and social research council mobility study ecsrcms of london finding weak results from this analysis the article then offers a more powerful test of factors predicting a move to jurisdictions with preferable tax rates

is there a j curve abstract if the response of the value of the trade balance to movements in the real exchange rate is described by a j curve then a real depreciation initially worsens a balance of trade deficit only improving it over time this paper investigates whether a j curve can be detected in the last twenty five years of american data no statistically reliable evidence of a stable j curve is detected the model is checked extensively to support this finding

trade liberalisation the peso and mexico s commodity trade flows with the united states abstract we assess the effects of real peso devaluations as well as the effects of gatt and nafta on mexico s in payments and out payments with the united states for 102 industries we find that relatively few trade flows are sensitive to changes in the real exchange rate probably due to production sharing and intra industry trade but devaluations affect mexican imports more than exports trade liberalisation has had a larger impact particularly on imports of intermediate goods and exports of certain manufactures many affected export industries are ones that have previously been shown to have economies of scale

the j curve a literature review due to lag structure currency devaluation is said to worsen the trade balance first and improve it later resulting in a pattern that resemble the letter j hence the j curve phenomenon since its introduction by magee in 1973 brooking papers on economic activity 1 pp 303 25 a large number of studies have attempted to test the phenomenon using different techniques and different model specifications the results are at best ambiguous and deserve to be collected together for the future generation of researchers and graduate students this paper fills such a vacuum in the literature by reviewing the j curve related empirical papers

business cycles in the united kingdom facts and fictions this paper documents the statistical properties of contemporary business fluctuations in the united kingdom we study the period 1956 90 using quarterly detrended data on key aggregate variables we compute selected moments of the data compare our results with those for the united states and rigorously test for dynamic instabilities our findings confirm the existence of substantive cyclical regularities both across countries and across time some notable cross country differences are also identified conclusions about stability are shown to be potentially sensitive to the method of testing in general cross correlations are appreciably more stable than standard deviations

demand and supply factors in the determination of nie exports a simultaneous error correction model for hong kong a comment v a muscatelli t g srinivasan and d vines 1992 purported to refute j riedel s 1988 finding that hong kong is a small price taking country in world markets this comment shows however that muscatelli srinivasan and vines s results are due entirely to an unjustifiable restriction they imposed on the estimated export demand equation and not the result of using a superior estimation technique as they asserted copyright 1994 by royal economic society

was it real the exchange rate interest differential relation over the modern floating rate period in this paper we explore the relationship between real exchange rates and real interest rate differentials in the united states germany japan and the united kingdom contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary disturbances are predominant we find little evidence of a stable relationship between real interest rates and real exchange rates we consider both in sample and out of sample tests one hypothesis that is consistent with our findings is that real disturbances such as productivity shocks may be a major source of exchange rate volatility this paper investigates the empirical relationship between major currency real exchange rates and real interest rates over the modern post march 1973 flexible rate experience the exchange rates examined here include the dollar mark dollar yen and dollar pound rates our two major findings are as follows first the data do not indicate a strong correspondence between real interest rate differentials short term or long term and real exchange rates this finding appears to conflict with the predictions of most monetary and portfolio balance models of exchange rate determination though the conflict can be substantially reconciled if aggregate disturbances are primarily real in nature i e changes in productivity tastes etc it is true that in many cases the sign of the estimated exchange rate interest rate differential relationship is consistent with the possible predominance of financial market disturbances but the relationship is not stable enough to be statistically significant second although one does find some evidence of a unit root in both real exchange rates and long term but not shortterm real interest differentials these two series do not appear to be linearly cointegrated hence the nonstationarity or near nonstationarity in the two series cannot be attributed to the same factor in section i we briefly describe a class of small scale monetary models of exchange rate determination the importance of this class of models for empirical work derives from its strong predictions about how the exchange rate will move

do devaluations improve the trade balance the evidence revisited do devaluations improve the trade balance the evidence revisited this paper reexamines the effectiveness of devaluation in trade balance adjustment the question is addressed in a framework which improves the previous empirical literature in several respects the evidence indicates that devaluations have been a successful tool in inducing trade balance adjustment in particular nominal devaluations are found to result in significant real devaluations that last for at least three years and the real devaluation induces significant trade flows that are distributed over a two to three year period the evidence comes from two different samples 1953 73 and 1975 84 involving twenty seven countries and sixty devaluation episodes 1 introduction do devaluations affect real magnitudes in particular the trade balance a devaluation may effect the trade balance through two channels devaluation of the real exchange rate and a direct effect on domestic absorption the traditional approach stresses the first channel a nominal devaluation is assumed to change the real exchange rate a relative price and thus improve competitiveness in turn if relative prices the terms of trade in a two country two good model affect the trade balance devaluation will be successful in the sense of improving the trade balance ceteris paribus the absorption effect becomes the sole or most important channel in the monetary approach in a world in which all goods and assets are perfect substitutes prices are exogenously given for the small country and wages and prices are flexible in both nominal and real terms a devaluation increases the price level by the same percentage the increase in the price level reduces real balances and thus domestic absorption dornbusch 1973 883 has argued that if such a real balance effect is not present then it might stand to reason that the effects of devaluation are negligible not that there must be other powerful avenues through which it exerts its effects emphasis added the controversy over the effects of devaluation on the trade balance arises because according to frenkel and johnson 1976 42 the monetary approach rejects the emphasis given to the role of relative prices in the analysis of devaluation global monetarists argue that neither of the links in the chain postulated by the traditional approach is likely to hold in practice see laffer 1977 the major disagreement centers on the question of the effectiveness of nominal devaluation to affect the real exchange rate and the importance of the latter in influencing trade flows theoretical arguments have not settled the issue the question is as strongly debated today as it was forty years ago see for example branson 1983 katseli 1983 kaldor 1983 nashashibi 1983 and mckinnon 1981 nor does it seem that the available empirical evidence leads to a consistent answer the best known studies cooper 1971 laffer 1977 salant 1977 miles 1979 gylfason and risager 1984 reach contradictory conclusions 1 cooper and gylfason and risager find that devaluations improve the trade balance or current account while laffer and miles conclude exactly the opposite salant finds that devaluations improve the trade balance but not as often as the overall balance of payments in the face of such diverse findings frenkel 1984 suggests that a reexamination of the issue would be useful indeed himarios 1985 shows that a close examination of miles s widely quoted study reveals serious deficiencies that once addressed lead to opposite results this paper provides new evidence concerning the effectiveness of devaluation in trade balance adjustment the approach differs from past studies in several respects it differs from cooper s laffer s and salant s studies in that it accounts for the effects of other variables that affect the trade balance

determinants of the demand for thailand s exports of tourism we investigate the effects of world income and the relative price of tourism in thailand on thailand s exports of tourism in contrast to previous studies we test for stationarity and cointegration of the variables of the model we find that the variables are not stationary in level form but they are cointegrated our estimate of the relative price elasticity of demand for thailand s exports of tourism is 1 199 in the short run and 0 891 in the long run the corresponding estimates for the income elasticity of demand are 1 926 and 2 342 respectively however only the short run price elasticity of demand is significantly different from zero

transitory and permanent disturbances and the current account an empirical analysis in the intertemporal framework the intertemporal models of current account determination demonstrate that in the analysis of the current account balance of a country it is important to distinguish between transitory and permanent disturbances in income and relative prices this paper attempts to decompose the observed data on income and real exchange rate into transitory and permanent components and then uses the decomposed series to test the empirical validity of the predictions of the intertemporal models evidence from the united states and japan provide very limited support for the intertemporal models in terms of the effects of transitory and permanent changes in income on current account balance for both us and japan the study finds that permanent changes in real exchange rate have significant effects on the current account balance statistical tests find no evidence of hysteresis in the trading relations of the two countries

effects of exchange rate variability on inflation variability abstract previous studies have postulated that there exists a positive relationship between the rate of inflation and its variability they have shown that a high inflation rate contributes to inflation variability in this paper we argue that with the current floating exchange rate system exchange rate variability is another factor contributing to inflation variability after incorporating a measure of exchange rate variability into a simple model used by previous authors we estimate our model using cross country data from 20 developed and 76 less developed countries the cross sectional regression results support our conjecture

the j curve effect and us agricultural and industrial trade this paper examines the j curve hypothesis for us agricultural and manufactured goods using the shiller lag model the results support the j curve effect for agricultural goods but not for manufactured goods these findings explain why many studies in the literature fail to support the j curve phenomenon there are two explanations for these findings 1 the aggregation bias of data that combine both agricultural and manufactured goods and 2 the country under study is often an industrial nation like the us or japan with a high proportion of manufactured goods in both exports and imports

impact of exchange rate uncertainty on trade flows evidence from commodity trade between the united states and the united kingdom previous studies that investigated the impact of exchange rate volatility on the trade flows employed aggregate trade data and standard estimation techniques they provided mixed results in this paper we use disaggregated import and export data for 177 commodities traded between the united states and the united kingdom to investigate whether volatility of the real bilateral dollar pound exchange rate has any detrimental effect on trade flows at the commodity level additionally we employ the bounds testing approach to cointegration and error correction modelling that is suitable for the models used mostly because it does not require pre unit root testing and variables in the model could be stationary non stationary or a combination of the two in most trade flow models estimated we found a negative effect of exchange rate volatility on commodity trade

impact of exchange rate uncertainty on commodity trade between us and sweden previous studies that investigated the effects of exchange rate uncertainty on the trade flows of sweden employed aggregate trade data either between sweden and the rest of the world or at bilateral level between sweden and her major trading partners in this article we disaggregate the trade data and employ the import and export data from 87 industries that trade between sweden and the us we find that exchange rate volatility has significant short run effects on the trade flows between the two countries in almost two third of the industries however the short run effects are translated into the long run effects in one third of the cases furthermore the real depreciation of krona against the dollar was found to have favourable effects on the overall trade balance between the two countries

the rise of china and east asian export performance is the crowding out fear warranted this paper examines how china s emergence as a major trading nation is affecting export performance of its east asian neighbours following a stage setting overview of trends and patterns of china s export performance it probes china competition in third country markets and emerging patterns of imports the east asian export experience is examined in a wider global context against the backdrop of the ongoing process of global production sharing the findings indicate that the china threat has been vastly exaggerated in the contemporary policy debate china s rapid market penetration in traditional labour intensive manufactured goods has occurred mostly at the expense of the high wage east asian countries without crowding out the export opportunities of low wage countries in the region more importantly china s rapid integration into global production networks as a major assembly centre has created new opportunities for the other east asian countries to engage in various segments of the value chain in line with their comparative advantage

trade flows relative prices and effective exchange rates a var on ethiopian data the dynamic response of trade flows to price and effective exchange rate changes is examined via var using quarerly data from ethiopia for the period 1973 i 1985 iv the results show one way granger causality running from prices and exchange rates to imports and exports without significant feedback imports and exports exhibit similar response patterns to unexpected changes in relative prices and exchange rates the responses of imports and exports are larger and the adjustment takes longer when relative prices rather than exchange rates caused a change in international prices in the long run changes in prices account for a larger percentage of the forecast error variances in imports and exports than exchange rate changes it is shown that devaluation may have an initial adverse effect on the trade balance

inflationary effects of changes in effective exchange rates ldcs experience the inflationary effects of devaluations in less developed countries is investigated using rate of change of effective exchange rates it is shown that for most countries in the sample devaluations or depreciations are inflationary during the current floating exchange rate system in addition to inflationary effects of depreciations excees money supply imported inflation and expectation are also identified as additional sources of inflation in less developed countries

discrepancies in international data an application to china hong kong entrepot trade before discussing discrepancies in international data it is essential to talk about the sources of the data the principal source for global trade statistics is the united nations un that agency relies on the trade statistics reported by its member countries the obvious discrepancy in these reports is that what country a says it sends to country b is not the same as what country b says it receives from a such differences in what the exporting and importing countries report is not just a feature of developing countries these discrepancies are pervasive in industrial countries as well for example since 1989 the united states has abandoned its attempt to keep track of exports to canada and now just relies on canadian data on its imports from the united states see robert feenstra 1997 table 2 prior to this action the united states underreported its exports to canada by more than 10 percent as compared to the canadian value this illustrates the general principle that the information collected by the importer which is often collecting tariff revenues and therefore has an incentive to record imports accurately is usually viewed as more accurate than that collected by the exporter there are then two problems with the un data it contains different information from the exporting and importing countries and it is expensive at least by the standards of lowbudget academic work progress on the first of these problems has been made by statistics canada in the world trade database wtdb that agency obtains the un trade data and then attempts to resolve the differences between the exporters and importers providing a single number for the value of each disaggregate good sent from country a to b these data are distributed on cd rom but are still fairly expensive by academic standards to make progress on the second problem the statistics canada data set for an early set of years 1970 1992 is distributed by the national bureau of economic research nber for a nominal fee also in cd rom format see feenstra et al 1997 in view of the widespread use of these data distributed by the un statistics canada or the nber it is worth asking how well the statistics canada database resolves the differing reports by the exporters and importers to take a particularly important example consider u s trade with china in 1996 the united states reported a deficit with china of 39 5 billion while the chinese reported a value of the u s deficit of 10 5 billion these two figures differ by 29 billion or a factor of three times at the heart of these differing values is the treatment of goods shipped through hong kong which remains a separate entity from china for customs purposes to what extent does statistics canada resolve the differences between these reported trade values to arrive at some credible value of bilateral trade unfortunately this issue is not resolved at all the values given in the statistics canada wtdb for chinese exports to the united states are very close to those reported by china and are much less than those reported by the united states this is contrary to the general principle stated above of treating the exporter s record of trade as less accurate than the importer s record on the other hand the u s official figures for imports from china are too high because they include the feenstra department of economnics university of california davis ca 95616 haas school of business university of califomia berkeley and national bureau of economic research hai department of economics fort lewis college and china centre for economic research beijing university woo and yao department of economics university of califomia davis we thank li yan jin hongman and jiang xiaozhu from the customs general administration people s republic of china for assisting with the study from which the results reported here are drawn

the transformation of competitive advantage in east asia an analysis of technological and trade specialisation summary in recent years there has been considerable interest in the relationship between a country s export competitiveness and the role played by technology in strengthening and maintaining competitive advantage a central feature of recent empirical work mainly focused on the oecd countries has rested on examining patterns of export and technological specialization between economies and sectors this paper moves attention away from the advanced industrialized economies to examine the trends for trade and technological specialization among the east asian developing economies in particular two aspects of specialization are examined first to what extent have patterns of competitive advantage changed over time and second to measure the relationship between patterns of trade and technological specialization important differences are found in the patterns of specialization and in the relationship between them among the advanced east asian economies and those catching up

cointegration how short is the long run abstract when testing for cointegration and faced with short sample periods it is common for researchers to turn to more frequently sampled observations that is to move from annual to quarterly or monthly data in order to increase the number of observations we argue that such a gain in the degrees of freedom is more apparent than real essentially cointegration is a long run concept and hence requires long spans of data to give tests for cointegration much power rather than merely large numbers of observations using monte carlo simulations we demonstrate this for four popular tests for cointegration

the us china trade imbalance will revaluing the rmb help much abstract the large us china trade imbalance is regularly blamed on the undervalued rmb using an estimated model of the trade balance we find that improvements in the trade balance are likely to be modest for plausible revaluations

the effects of trade liberalization on imports in selected developing countries abstract this paper analyses the impact of the reduction of tariff and nontariff barriers on the imports of 22 selected developing countries utilizing dynamic panel data techniques domestic income and relative prices are found to be significant determinants of import growth in addition the results indicate that import duties reduce import growth but the effect varies according to the region and the type of trade policy regime existing in the country the results also show that the elimination of trade policy distortions has a strong positive impact on import growth finally it is found that income and price elasticities are higher as a result of trade policy reform

exchange rate of the us dollar and the j curve the case of oil exporting countries abstract this study examines the effects of changes in the exchange rate of the us dollar on the trade balances of three oil exporting countries namely iran venezuela and saudi arabia an exchange rate pass through model is applied to allow changes in the exchange rate of the dollar to affect prices of traded goods then the impact of changes in prices on the quantities of imports and exports of these economies is estimated the results suggest a partial exchange rate pass through to these countries import and export prices in terms of the us dollar while the three countries raise the price of their primary export namely crude oil in response to a depreciation of the dollar saudi arabia s long run pricing strategy in securing a larger market share stands in contrast to that of the two other opec members the sum of the estimated long run price elasticities of demand for imports and exports is found to exceed unity for iran and venezuela but less than unity for saudi arabia

india s trade balance in the 1980s an econometric analysis the paper is an examination of india s trade balance in the 1980s the approach attempted is of examining the bilateral trade balances of india with nine trading partners from the non communist bloc the long run equilibrium relations are studied via two var models in johansen s multivariate cointegration framework five hypotheses of interest are singled out for attention the nominal and real exchange rates consistently emerge as important influences on the trade balance however as the exchange rates fail weak exogeneity tests policy implications are not clear cut

how sensitive is commodity trade flows between us and india to currency depreciation previous studies that investigated the impact of real depreciation of the rupee on indian trade balance used aggregate trade data and provided no support for real depreciation to be effective in improving india s trade balance in this article we disaggregate the indian trade data by commodity and consider the sensitivity of each industry s inpayments export value and outpayments import value to real rupee dollar exchange rate annual data over the period of 1962 to 2004 from 40 industries that trade between the two countries as well as bounds testing approach are used to show that while in half of the industries real depreciation of rupee has short run effects on inpayments and outpayments the short run effects do not last into the long run in majority of the cases

taiwan s exports and trade imbalance against us and japan an empirical analysis the persistence of the bilateral trade surplus between taiwan and the usa and the bilateral trade deficit between taiwan and japan despite the significant appreciation or depreciation of the nt dollar during the early 1980s to the mid 1990s renewed interest to seek explanations for these phenomena to assess the above proposition a polynomial distributed lag pdl method is imposed on the impact of changes in the real exchange rate on the bilateral trade structure particularly export demand and trade imbalance between taiwan the usa and japan from 1981 to 1998 the empirical findings show that 1 the real income factors have important effects on the real exports in both cases 2 the real exchange rates and the real imports are not major determinants of the export demand from taiwan to the usa but they do play an important role on the real exports from taiwan to japan 3 the real exchange rate has significant effect on the real trade surplus with the usa and on trade deficit with japan but the real

exchange rates and fiscal policy in a popular model of international trade this paper develops a reinterpretation of the devaluation analysis in a popular model of international trade developed by charles bickerdike joan robinson and lloyd metzler it has come to be known as the elasticity approach 1 that model developed in terms of independent markets for imports and exports has been criticized for its apparent lack of general equilibrium properties the assumptions underlying the model have remained by and large implicit and vary across users and the integration of this analysis with the absorption approach and macroeconomics has never been demonstrated all this is very much recognized and indeed application of the model is consistently accompanied by appropriate partial equilibrium impact effect or upper bound caveats these shortcomings notwithstanding the model continues to enjoy substantial popularity in policy discussions and interpretations of current events in empirical work and in recent textbooks in the field of international economics the brm model is likely to remain the preferred tool in the analysis of trade balance issues along with the foreign trade multiplier model it is therefore interesting and useful to enquire into its formal general equilibrium implications this paper is concerned with one such interpretation involving a nontraded goods sector and a well defined government policy that makes the analysis consistent with the absorption approach while it may well be possible to generate alternative interpretations the present analysis would seem to have the advantage of simplicity while at the same time pointing out the essential properties that would have to be satisfied by alternative treatments in section i a brief review of the brm approach is offered in section ii that approach is interpreted in terms of a simple model with nontraded goods and constant terms of trade the implicit assumptions of the brm model are brought to the f oreground by an explicit consideration of the market for home goods the equilibrium conditions and the role of the relative price of nontraded goods 3 following that analysis section iii considers the subsidiary issues that are raised by variable terms of trade the notion of total elasticities is given an interpretation in section iv where we return to the composite traded good model to explore alternative assumptions about absorption policies

evasion behaviors of exporters and importers evidence from the u s china trade data discrepancy abstract since the late 1990s reported u s imports from china and hong kong have regularly and increasingly exceeded reported exports of china and hong kong to the united states this discrepancy which is not caused by re exporting through hong kong varies by product categories and in some cases takes the opposite sign in this paper we focus on china s direct exports to the united states using a model that allows for simultaneous misreporting to two authorities we find strong statistical evidence of under reporting exports at the chinese border to avoid paying value added tax vat the value of vat avoided is estimated at 6 5 billion during 2002 2008 and the associated understatements account for approximately two thirds of the discrepancy we also provide evidence of tariff evasion at the u s border in particular for related party transactions and indirect evidence of transfer pricing and evasion of chinese capital controls an estimated 2 billion of u s tariff revenue is lost due to such evasion during 2002 2008 which reduces the apparent size of the statistical discrepancy

is there a long run relation between the trade balance and the real effective exchange rate of ldcs abstract using quarterly data over 1973 1988 period the cointegration analysis is used and it is shown that the trade balance and the real effective exchange rate of some ldcs are cointegrated in the long run this approach is argued to be a close substitute for testing the marshall lerner condition

taiwan s exports and trade imbalance against us and japan an empirical investigation based on error correction model this study employs recent advances in time series analysis cointegration and error correction model to examine the long run and short run determinants of the exports and trade imbalance between the usa japan and taiwan the unit root tests reveal nonstationary in most of the variables the cointegration tests affirm positive the long run associations are between the exchange rate changes and the exports as well as the trade imbalance once these long run effects are accounted for it is found that there are evidences of short run relationship between these variables

vertical product differentiation and the import demand function theory and evidence in this paper we use a model of vertical product differentiation to cast doubt on the general validity of the import demand function as specified in macroeconomic models the empirical importance of our theoretical concerns is then established according to our first hypothesis the share of a good s imports in total imports is non increasing in domestic wages if the country has comparative advantage in high quality varieties of this good the second hypothesis states that the share of a good s imports is increasing in non wage domes tic income if the country has comparative advantage in high quality varieties of this good

housing vacancy and rental adjustment evidence from hong kong the traditional rental adjustment equation is flawed in that the equilibrium paths for the adjustment of rents and vacancy rates cannot hold simultaneously over time this paper suggests a two equation model of rental adjustments based on adaptive expectations rather than the single equation model presented in the traditional literature and provides empirical tests annual data from the housing market in hong kong during the 1980 96 period are consistent with the adjustment equation the results also show that the rate of change of real rents is neutral with respect to inflation

the balance of trade and exchange rates theory and contemporary evidence from tourism abstract the purpose of this study is to investigate the effects of exchange rate depreciations and appreciations on the tourism trade balance specifically we employed linear and nonlinear autoregressive distributed lag ardl cointegration techniques to analyze the extent to which currency depreciations and appreciations affect the united states u s bilateral tourism trade with canada mexico and the united kingdom u k the results showed that the depreciation of the u s dollar subsequently improves the u s trade balance with all three trading partners however while the appreciation of the u s dollar deteriorates the u s bilateral tourism trade balance with canada and the u k it does not ultimately affect the u s bilateral tourism trade with mexico in the long term these results provide evidence contradicting the j curve theory supporting the postulations of the ml condition theoretical and policy implications are discussed within the realms of j curve theory marshall lerner ml condition international trade and tourism

public sector performance move or monitor governmental performance is a concern of citizens and politicians alike a specific interest is public sector waste which is thought to be pervasive and efforts to improve public sector performance are believed to be minimal economists have studied the topic extensively this paper discusses options on measuring public sector performance in urban areas and it also suggests certain public policy options that i believe deserve additional attention from a citizen s point of view when public service performance declines one can leave the jurisdiction this exit option has a substantial historical precedent in the united states going back to at least the landing of the mayflower in the urban public finance literature this is a consequence of the tiebout 1956 model in which there are a sufficient number of jurisdictions among which individuals may choose to live and people vote with their feet the model suggests that exit or the threat of exit leads to competitive forces that improve efficiency in the public sector an alternative to exit comes about through monitoring and voting monitoring and voting are attractive ways to effect change for individuals who do not want to exit as suggested by davis and hayes 1993 a fairly simple model can demonstrate the demand for good government there is a literature that examines the motives for exit dowding and john 1996 which points out and concludes that people may not move in response to the fiscal decisions of local governments perhaps voting and monitoring are more attractive options at least to a proportion of the population 2 this paper explores the move monitor trade off in influencing urban public sector performance although heuristic arguments can be made concerning the relative importance of moving or monitoring few researchers have investigated when if ever move and or monitor are effective means of improving public sector efficiency in this paper i would like to suggest that there are gaps in the literature proposing topics or future research

establishing the micro foundations of a macro theory information movers and the competitive local market for public goods e tiebout model of competition in the local market for public goods is an important and controversial theory the current debate revolves around the apparent disparity between macro 5 x empirical studies that show greater efficiency in the supply of public goods in polycentric regions compared to consolidated ones and micro evidence of widespread citizen consumer ignorance which has been used to argue that individual actions cannot plausibly lead to efficiency enhancing competition between local governments we argue that competitive markets can be driven by a subset of informed consumers who shop around between alternate suppliers and produce pressure for competitive outcomes from which all consumers benefit using data from a survey of overfive hundred households we analyze the role of these marginal citizen consumers and incorporate the costs of information gathering and the strategic interests of local governments into the competitive market model

exchange rate volatility and pakistan s exports to the developed world 1974 85 abstract the paper attempts to estimate the impact of exchange rate uncertainty on pakistan s exports to the developed world for 1974 85 discovering strong evidence to suggest that exports were adversely affected by the increased variability of its bilateral exchange rates unlike much of the recent evidence on developed countries however it is the variability in nominal rather than real exchange rates that is significant the computations also suggest the presence of strong third country effects

foreign exchange reserves and import demand evidence from latin america this paper investigates the impact of foreign reserves domestic real income and relative import prices on import demand for seven latin american countries we differentiate empirically between the short run and long run impact of reserves income and prices on imports the paper has three main results first we show that there exists a unique long run relationship among real imports real income relative import prices and real foreign exchange reserves for all seven countries second we find that increases in foreign exchange reserves exert a significant positive effect on import demand in both the long run and the short run in all countries however the economic impact of foreign exchange reserves is rather small finally we find that the long and short run impact of real domestic income on import demand is positive as well while the effect of relative prices is negative

the tiebout hypothesis in the united states an analysis of black consumer voters 1970 75 this study provides a preliminary empirical investigation as to whether black consumer voters were attracted by the prospect of higher afdc benefits as they made interstate migration decisions over the 1970 75 time period unlike most previous studies there was no compelling evidence of such a attraction of course this study is only preliminary and one could easily make an argument that there are omitted variables from the estimating equations

the j curve evidence from commodity trade between uk and china in testing the short run j curve effect and the long run effects of currency depreciation on the trade balance many researchers have used either trade data between one country and the rest of the world or between one country and another trading partner both groups are said to suffer from aggregation bias to reduce the bias in this article we consider trade data between one country the us and her trading partner china disaggregated by commodity we use imports and exports of 88 industries 2 digit and 3 digit classifications and cointegration analysis to show that the trade balance of at least 34 of the industries react favourably to real depreciation of the dollar the j curve effect is detected in 22 industries furthermore most of these industries that are sensitive to currency depreciation are durable commodity groupings

inflation taxes and housing a theoretical analysis abstract this paper examines the real effects of inflation under a distortionary tax system the presence of a tax subsidy to housing substantially alters the effects of inflation on the capital intensity of production and on the market interest rate the analysis suggests that not taxing the flow of services from housing has caused inflation to reduce capital intensity thereby decreasing u s productivity furthermore this tax subsidy has caused inflation to raise the real interest rate while reducing the after tax real returns to assets

exchange rate sensitivity of the demand for money in developing countries there is consensus among researches that under the present floating exchange rate system although developing countries peg their exchange rate to a major currency they cannot avoid fluctuation in their effective exchange rates as long as major currencies fluctuate against one another few authors have investigated the effects of changes in effective exchange rates of developing countries on their imports exports trade balance demand for international reserves inflation etc in this paper we try to inestigate the effects of effective exchange rates of developing countries on their demand for money previous authors who have estimated a money demand function inclusive of an exchange rate variable bilateral or effective have restricted themselves to industrial countries only by using quarterly data over the 1973 85 period it is shown that in most developing countries while the short run effcts of depreciation could be in either direction its long run effects are negative indicating that deprecia

nominal and real effective exchange rates of middle eastern countries and their trade performance indexes of real and nominal effective exchange rates that are published by the imf are mostly for industrial countries none of the middle eastern countries have received any attention on this regard this paper tries to close the gap by constructing such indexes for 11 middle eastern countries over 1971 i 1994 iv period as an application long run response of their trade balance to devaluation is also investigated

welfare policies and migration of the poor in the united states an empirical note this paper has investigated the impact of geographic welfare benefit differentials upon migration in the united states unlike other related studies which typically focus upon black migration as a surrogate measure of migration of the poor the present study focuses directly upon migration of the poor per se a variety of reduced form estimates are provided the evidence strongly suggests that the net in migration of the poor is positively and significantly influenced by higher nominal afdc levels and by higher real afdc levels these findings support the welfare magnet hypothesis which alleges that relatively high welfare levels act to attract poor migrants moreover given that poor migrants are attracted non only by high nominal welfare levels but also by high real welfare levels an argument can be made for establishing geographically uniform real welfare benefit levels in the united states this uniformity presumably should act over the long run to eliminate the human resource distortions being caused by the currently prevailing welfare system

commodity trade between pakistan and the us is there evidence of the j curve abstracta few studies that have attempted to estimate the short run j curve and long run impact of exchange rate depreciation on pakistan s trade balance are either based on aggregate trade data between pakistan and the rest of the world or between pakistan and her bilateral trading partners the findings are mixed at best considering the trade balance between pakistan and the us as one of its major partners no significant effects have been discovered suspecting that the trade flows between the two countries could suffer from another aggregation bias we disaggregate their trade flows by commodity and consider the trade balance of 45 industries that trade between the two countries we find significant short run effects of currency depreciation on the trade balance of 17 industries the short run effects last into the long run in 15 cases the largest industry that account for more than 10 of the trade seems to benefit from real depreciation in the long run

asymmetric response of the us india trade balance to exchange rate changes evidence from 68 industries the relationship between the trade balance and the exchange rate continues to attract attention by international economists and has entered into new territory mostly due to advances in econometric methods the introduction of asymmetric error correction modelling and asymmetric cointegration using the nonlinear ardl approach of shin et al festschrift in honor of peter schmidt econometric methods and applications springer 2014 281 as compared to the symmetric and linear ardl approach of pesaran et al journal of applied econometrics 2001 16 289 has led us in a new direction to discover relatively better results we apply these methods to the bilateral trade balance model of each of the 68 industries that trade between india and the usa the nonlinear approach not only provides more support to the j curve effect but also yields support in favour of short run and long run asymmetric effects of exchange rate changes in most of the industries

impulse response analysis and orcutt s hypothesis in trade evidence from developing countries orcutt s hypothesis in international economics implies that trade flows respond to exchange rate changes faster than to changes in relative prices most previous studies used import and export demand models and tested the hypothesis by imposing and comparing lag lengths on the exchange rate and relative prices one recent study however employed impulse response of trade flows to one sd shock to the nominal exchange rate and one sd shock to relative prices and tested the orcutt s hypothesis for several industrial countries in this article we follow this study and test the hypothesis for six developing countries using impulse response analysis like the other study for industrial countries we do not find much support for the hypothesis