competition and industrial policies in a history friendly model of the evolution of the computer industry abstract in this paper we explore some problems that industrial policy faces in industries characterized by dynamic increasing returns on the basis of a history friendly model of the evolution of the computer industry how does policy affect industry structure over the course of industry evolution is the timing of the intervention important do policy interventions have indirect and perhaps unintended consequences on different markets at different times we focus on two sets of policies antitrust and interventions aiming at supporting the entry of new forms in the industry the results of our simulations show that if strong dynamic increasing returns are operative both through technological capabilities and through customer tendency to stick with a brand there is little that antitrust and entry policy could have done to avert the rise of a dominant firm in mainframes on the other hand if the customer lock in effect had been smaller either by chance or through policies that discouraged efforts of firms to lock in their customers the situation might have been somewhat different in the first place even in the absence of antitrust or entry encouraging policies market concentration would have been lower albeit a dominant firm would emerge anyhow second antitrust and entry encouraging policies would have been more effective in assuring that concentration would decrease the leading firm would continue to dominate the market but its relative power would be reduced

endogenous export prices and the taiwan us trade imbalance to explain the perplexing issue of why taiwan s trade imbalance with the us has persisted despite the depreciation of the dollar we estimate a four equation model to determine the direct pass through dpt and indirect cost adjustment ica effects of exchange rate changes on taiwan s export prices the ica effect is important in the case of taiwan because it imports mostly intermediate goods for the production of manufactured goods that are exported our findings support the view that dpt and ica effects reduce the effectiveness of exchange rate as a mechanism for international trade adjustment

u s bilateral trade flows and exchange risk during the floating period abstract this paper tests for real exchange rate risk effects on u s bilateral trade flows during the floating period using several new as well as previously used risk measures significant negative effects occur in five of six u s import flows and in two of six u s export flows with one export flow showing a significant positive effect these results are consistent with several previous findings for aggregate u s trade two risk measures using the forward exchange rate and assuming a time varying risk premium provide marginally more significant results than the others

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

secular and cyclical responses of u s trade to income an evaluation of traditional models in the three decades since guy orcutt s 1950 classic paper evaluating empirical research on international trade flows most trade research has focused on the influence of prices in the decade since the benchmark study by houthakker and magee 1969 examination of the role of prices has accelerated although income is consistently the most significant explanatory variable in these studies it is typically introduced only as a background control variable rather than as a variable of central interest the few explicit studies of the link from income to trade either use proxies such as delivery lags and inventory ratios to investigate the dynamics of the link e g gregory 1971 and artus 1973 or decompose income into trend deviation from trend and in one instance change in deviation from trend in an attempt to separate the secular and business cycle components e g ball eaton and steuer 1966 khan and ross 1975 and dunlevy 1980 stephen magee 1975 pp 188 193 211 214 provides a persuasive rationale for at least the spirit of the second line of research arguing that trade flows respond differently to secular and business cycle income changes and that regression estimates with income in level form mix these effects time domain decomposition is now an established practice with the trend response identified with secular forces like comparative advantage hence could be positive or negative in either demand or supply the deviation from trend response with a business cycle keynesian mechanism hence is likely to be positive in demand and negative in supply and the change in deviation from trend response with a sneed of adjustment constraint hence is likely to be negative the most recent evidence bearing on these issues is provided by dunlevy 1980 who finds that the effect of the business cycle income proxy deviation fromtrend income on the supply of exports for the united states and the united kingdom is positive rather than negative evidence contradicting both theory and evidence in earlier capacity pressure studies in this paper we first evaluate traditional regression estimates of income elasticities of demand and supply for u s imports and exports from 1955 to 1979 then compare these estimates to cross spectral estimates of the secular and business cycle responses of trade to income the spectral technique is used because by definition the approach estimates separately the secular and business cycle links between trade and income if the response of trade to movements in income does differ over cycles regression estimates of income elasticities may reflect bias and instability due to cycle varying parameters regression elasticity estimates with income in trend and deviation from trend forms do provide separate estimates but the decomposition is useful only to the degree that the two variables are accurate proxies for secular and business cycle movements in income it should be emphasized that we are not using spectral analysis to detect lead lag properties since these are more directly obtained in the time domain and are relatively trivial for our sample the unique advantage of spectral analysis is that it isolates secular and business cycle components directly even when the time domain link is only contemporaneous the paper is organized as follows section ii presents and evaluates time domain estimates of standard demand and supply equations for u s imports and exports and presents caveats regarding interpretation of the trend and deviationfrom trend income variables section iii proreceived for publication march 4 1981 revision accepted for publication may 12 1982 university of oregon an earlier draft of this paper was presented at the fall 1980 north american meeting of the econometric society we acknowledge helpful comments from s y kwack john mutti and two anonymous referees we also thank john pippenger for supplying the spectral program specx68 and the university of oregon for a faculty research grant remaining errors are solely ours i application of spectral methods to investigate trade income links was first suggested by ball eaton and steuer 1966 p 503 they were unable to use the technique however because the data series available at that time were too short

the role of the state in evolutionary economics from an evolutionary perspective the role of public policy extends far beyond the mere correction of market failures emphasised by neoclassical economics public policy may facilitate the market process it may also guide the market process in the case of multiple equilibria the state can finally play a more creative role by allowing private agents to satisfy individually or collectively certain goals unattainable through market forces alone however this paper shows that although the scope of useful public policies is broader in an evolutionary approach than in neoclassical economics the government s ability to direct the evolution of the economic system is highly limited this paper also tries to formulate certain normative criteria which could act as public policy guidelines in an evolutionary perspective copyright 2004 oxford university press

exchange rate volatility international trade and resource allocation a perspective on recent research abstract recent research on the effects of exchange rate volatility is discussed and directions for future research are explored the need to pay more attention to the effects of diversification and firms characteristic is emphasized it is suggested that while international risk has risen substantially since floating the differential between international and domestic risk may not this could help explain the failure of international trade to fall drastically and suggests that exchange rate volatility has been more a reflection than an independent cause of underlying instability

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

the hodrick prescott filter the slutzky effect and the distortionary effect of filters abstract i construct a metric based on optimal filtering for measuring the distortionary effect of business cycle filters the distortionary effect of a filter depends both on the power transfer function of the filter and on the spectrum of the filtered time series the metric is used for two purposes first to determine the optimal value of the smoothing parameter in the hodrick prescott filter hp filter secondly to measure the size of distortions of ten different filters the slutzky effect is a special case of a more general pattern of distortions and it is shown that the alleged slutzky effect of the hp filter is due to an insufficient distinction between the effect of filtering with an ideal high pass filter and the distortionary effect of the hp filter

impact of the terms of trade on the u s trade balance a reexamination the right conclusion could be that there is a strong connection between the spectral components with specified periods a possible economic interpretation could identify a strong long term in the sense of the specified periods connection between both series but that would still not allow us to say anything concerning the size and direction of the time delay between the two series for such an analysis we would have to at least consider the phase angles between the components because of the ambivalent meaning of the phase angle in relation to the direction and number of periods the final answer could come only from the time domain analysis however the fact that only spectral components with longer periods i e smaller frequencies show coherency suggests something else in order to influence the balance of trade the changes in the terms of trade should be durable enough mathematical formalization of this concept of durability would therefore be helpful i would propose that further research be done in this respect

financial contagion and international portfolio flows financial contagion is an issue of interest to policymakers and portfolio managers in the presence of contagion the benefits of geographical diversification may be overstated contagion is defined independently of changes in macroeconomic fundamentals it corresponds to a situation in which shocks in one country spread to another country in a significantly more pronounced manner than during quiet times in the study reported here i attempted to measure contagion from daily cross border portfolio flows using data from state street bank and trust company i constructed three indexes for 1996 through 2000 i found little statistical evidence of contagion but the weighted index that measured the contagiousness of flows reached its four year low in august 1998 suggesting that the russian crisis was characterized by both contagion and large aggregate outflows i also found that contagion appears to be regional and that the developed countries seem to be sheltered from contagion

unravelling financial market linkages during crises an empirical model of multiple asset classes across countries is formulated in a latent factor framework a special feature of the model is that financial market linkages during periods of financial crises including spillover and contagion effects are formally specified the model also captures a range of common factors including global shocks country and market shocks and idiosyncratic shocks the framework is applied to modelling linkages between currency and equity markets during the east asian financial crisis of 1997 98 the results provide strong evidence that cross market links are important spillovers have a relatively larger effect on volatility than contagion but both are statistically significant

exchange rate risk and u s agricultural trade flows this paper analyzes the effect of exchange rate risk on u s agricultural trade flows a model which incorporates exchange rate risk is applied to ten countries while exchange rate risk was not significant in the seven developed markets results indicate that the exchange rate variable adversely affected u s agricultural exports to the three developing countries used in the analysis these findings underscore the importance of exchange rate risk in developing countries trading behavior issues such as establishment of well developed financial and commodity markets in developing countries must be addressed in future research

dutch disease government policy and import demand in nigeria the effects of sectoral changes and government policies on import demand in nigeria are examined in the context of the oil shocks of the 1970s and 1980s a two equation model is estimated to determine real import demand and the real exchange rate the results show that import demand increased significantly in response to the boom induced squeeze on the agricultural sector furthermore by inducing and sustaining real exchange rate overvaluation expansionary government policies contributed to higher import demand even after the collapse in oil prices

exchange rate variation commodity price variation and the implications for international trade abstract a commonly cited disadvantage of floating exchange rates is that a fluctuating exchange rate reduces international trade when firm owners are risk averse risk averse firm owners are concerned with the variation in the real domestic currency price of the good they export or import this price variation depends on exchange rate variation but also on a good s foreign currency price variation domestic price level variation and the covariation between these three variables the empirical results presented here show that for many commodities floating exchange rates did not cause a significant increase in overall real domestic currency price variation

exchange rate effects on the volume and variability of trade flows abstract this paper investigates the effects of exchange rate uncertainty on the volume and variability of trade flows employing a signal extraction framework we show that the direction and magnitude of importers and exporters optimal trading activities depend upon the source of the uncertainty general microstructure shocks fundamental factors driving the exchange rate process or a noisy signal of policy innovations providing a rationale for the contradictory empirical evidence in the literature we also show that exchange rate uncertainty emanating from general microstructure shocks and the fundamental factors reduces the variability of trade flows while that related to a noisy signal of policy innovations increases variability

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

how sensitive are malaysia s bilateral trade flows to depreciation in an attempt to assess the impact of currency depreciation on the trade balance recent studies are employing disaggregated trade data to avoid aggregation bias however since import and export prices are not available at disaggregated level recent studies are using export and import values rather than their volumes so that they can establish direct relation between inpayments and the exchange rate as well as between outpayments and the exchange rate this study explores the experience of malaysia bilateral inpayments and outpayments models are estimated between malaysia and her 14 trading partners using quarterly data and bound testing approach to cointegration the results show that while real depreciation of the ringgit has short run effects in the long run it increases malaysia s inpayments from only five trading partners

does real exchange rate volatility affect sectoral trade flows this article investigates empirically the effect of real exchange rate volatility on sectoral bilateral trade flows between the united states and its top 13 trading partners our investigation also considers those effects on trade flows that may arise through changes in income volatility and the interaction between income and exchange rate volatilities we provide evidence that i exchange rate volatility does not systematically affect sectoral trade flows ii income volatility has little impact on trade flows and iii the effect of the interaction term on trade flows is opposite that of exchange rate volatility dampening its impact on trade flows

the effects of real exchange rate risk on international trade abstract by assuming real profit maximization and uncertain prices as well as exchange rates we conclude that it is uncertain percentage changes in the real exchange rate that are risky in international trade empirical estimation of fourteen bilateral trade flows among industrialized countries finds a significant negative effect on trade quantity from such risk in a number of these cases the expectation variable has a positive effect in a larger number of cases significant price effects from the expectation variable are fewer and from risk are negligible

currency crashes in emerging markets an empirical treatment we use a panel of annual data for over 100 developing countries from 1971 through 1992 to characterize currency crashes we define a currency crash as a large change of the nominal exchange rate that is also a substantial increase in the rate of change of nominal depreciation we examine the composition of the debt as well as its level and a variety of other macroeconomic factors external and foreign crashes tend to occur when output growth is low the growth of domestic credit is high and the level of foreign interest rates are high a low ratio of fdi to debt is consistently associated with a high likelihood of a crash

distinguished lecture on economics in government the private uses of public interests incentives and institutions as a long time student of the public sector i welcomed the opportunity to come to washington as a member of the council of economic advisers and later to become the chairman of the council partly because it gave me an opportunity to study at first hand this immensely important part of our economy and society and to test my ideas against the reality of government in action to be sure i came also as an activist if not with a fully articulated agenda at least with a view about what it was that government should and should not be doing my reference point was the fundamental theorems of welfare economics which as some describe them proved that the market left to itself would produce efficient allocations many saw in these theorems the vindication of adam smith s faith in the invisible hand leading the self interested decisions of each person to maximize the well being of the nation as a whole today many of us look at the fundamental theorem not as a description of the world but as an explication of the conditions under which a market equilibrium will be pareto efficient these conditions are quite strong the importance of some of the more explicit assumptions like the lack of externalities and the completeness of markets has long been known in the last two decades we have explored much more seriously the consequences of the informational assumptions implicit in the belief that markets are efficient in particular it has been shown that in the presence of imperfect information or incomplete markets the economy will not be pareto efficient in other words there joseph stiglitz is senior vice president and chief economist world bank washington d c stiglitz was a member of the council of economic advisers from 1993 95 and chairman

u s japanese bilateral trade and the yen dollar exchange rate an empirical analysis the united states has recently experienced unprecedented balance of trade deficits the merchandise trade deficit reached an all time high of over 61 billion in 1983 and for 1984 was 108 billion japan is often singled out as the major contributor to this deficit in 1984 roughly one third of the u s merchandise trade deficit and over one half of the u s manufacturing trade deficit was with japan moreover since shifts in trade balances are widely regarded as a function of changes in exchange rates there has been a tendency to focus on the general depreciation of the yen in terms of the dollar which began in 1978 in explaining the u s trade deficit this paper explores empirically the response of the u s japanese trade balance in manufacturing to movements in the yen dollar rate the analysis based on both structural and reduced form approaches provides a test of the conventional view that the weak yen has been a major factor explaining the japanese penetration into the u s manufacturing sector while japanese protectionism has effectively insulated japan s markets from u s competition our analysis does not support this view we find u s imports from japan essentially insensitive to exchange rate movements but u s exports to japan highly exchange rate elastic since u s manufacturing imports from japan dominate corresponding exports 58 billion to 8 billion in 1984 we conclude that even a sustained appreciation of the yen in terms of the dollar is unlikely to reduce significantly the u s manufacturing trade deficit in section ii of this paper we specify structural and reduced form models explaining u s bilateral manufacturing trade with japan in section iii we present and evaluate struc

the supply and demand for imports and exports in a simultaneous model previous studies on the behaviour of aggregate exports and imports have tended to ignore the simultaneous relationship between quantity and price this paper investigates the price responsiveness of export and import demand and supply in eight african countries the results indicate that export demand price elasticities are smaller when the sample is african the import supply and demand elasticities were found to be generally large the marshall lerner condition of balance of payment stability is found to be easily satisfied a positively sloped function of export supply is found to exist for a majority of countries in the sample the average time lag of export supply is found to be about a year the disequilibrium model is found to be more appropriate for import demand import supply and export supply

why is it so difficult to find an effect of exchange rate risk on trade abstract it is commonly argued that exchange rate risk hampers international trade however the large literature on this subject has not yet provided conclusive evidence this paper analyzes why it is so difficult to obtain a clear answer from time series analyses we use data on bilateral aggregate u s exports to the other g7 countries the results show that as far as the exchange rate is concerned export decisions are mostly affected by the probability distribution of the about one year ahead rate the riskiness of the exchange rate at such a long horizon appears fairly constant over time with only short term fluctuations this makes it difficult to discover the true effect of exchange rate risk on trade from the time series data that are typically available

the adjustment of canadian import demand to changes in income prices and exchange rates the paper provides estimates of the sensitivity of canadian import demand to changes in income prices and exchange rates the model specification allows for the con sideration of long run elasticities as well as the dynamics of short run adjustment of imports to changes in these variables the estimated long run elasticities obtained are similar to those in previous studies it is also shown that canadian imports react quickly to changes in either foreign or domestic prices but that the reaction to changes in exchange rates is much slower

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

technology systems and technology policy in an evolutionary framework the central purpose of this paper is to outline an evolutionary theory of technology policy and to connect it with the emerging literature on national systems of innovation any understanding of technology policy must be based on a clear understanding of the nature of technology and the important differences between science and technology technology can be treated in terms of knowledge skills and artifacts and in each case there are different variety generating mechanisms different selection processes and different institutional structures for policy purposes the degree of connection between these different dimensions of technology is at the core of technology policy c 1995 academic press inc copyright 1995 by oxford university press

2 the institutional structure of production 1 prize lecture to the memory of alfred nobel december 9 1991 this abstract was borrowed from another version of this item

measuring and analysing the effects of short term volatility in real exchange rates this paper examines short term volatility in the real effective exchange rates of industrial countries and its impact on their imports it yields three conclusions first volatility has not diminished as markets have gained experience with floating exchange rates the trend appears to be in the opposite direction for some countries second exposure to short term volatility has differed among countries japan and sweden have experienced much more than most other industrial countries third volatility appears to depress the volume of international trade this third finding is consistent with results reported by cushman and by akhtar and hilton and challenges earlier findings by hooper and kohlhagen

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

externalities in economies with imperfect information and incomplete markets this paper presents a simple general framework for analyzing externalities in economies with incomplete markets and imperfect infonnation by identifying the pecuniary effects of these externalities that net out the paper simplifies the problem of determining when tax interventions are pareto improving the approach indicates that such tax interventions almost always exist and that equilibria in situations of imperfect information are rarely constrained pareto optima it can also lead to simple tests based on readily observable indicators of the efficacy of particular tax policies in situations involving adverse selection signaling moral hazard incomplete contingent claims markets and queue rationing equilibria traditional discussions of externalities have emphasized the distinction between technological externalities in which the action of one individual or firm directly affects the utility or profit ofanother and pecuniary externalities in which one individual s or firm s actions affect another only through effects on prices while the presence of technological externalities imply in general that a competitive equilibrium may not be pareto efficient pecuniary externalities hy themselves are not a source of inefficiency the fact that prices change has of course important consequences there are both distributional and allocational effects but the distribution effects net out gains for example hy firms whose prices increase are precisely offset by losses e g to individuals who must pay higher prices and there are no welfare losses from the allocation effects as long as the price changes involved are small if firms are maximizing profits and individuals are maximizing utility both facing prices that correctly refiect opportunity costs then standard envelope theorem arguments imply that changes in profits or utility induced by changes in allocations resulting from any small change in prices are negligible

us bilateral trade equations forecasts and structural stability in this paper actual recent us trade values are compared with out of sample forecasts using a standard specification for real bilateral trade value equations though fairly accurate on average there are large bilateral errors a battery of coefficient stability tests indicates significant instability more often for imports over the forecast period and more often for exports over the latter part of the estimation period thus standard bilateral trade equations appear to violate the basic regression assumption of stability and may be of little use for forecasting

making sense of institutions as a factor shaping economic performance abstract there has recently been a resurgence of interest in how institutions affect economic performance a review of this literature reveals that the concept of an institution means different things to different scholars both within economics and across the social sciences we discuss what factors unify the different definitions of institutions and develop a concept of institutions useful for the analysis of economic performance and economic growth in particular specifically we develop the notion of institutions as standard social technologies economic growth results from the co evolution of physical and social technologies

bilateral trade elasticities this paper estimates income and price elasticities for bilateral world trade in addition to testing the properties of the error terms the dynamic specification and the assumption of parameter constancy the analysis presents the first application of the bank spectrum estimator to bilateral trade flows for all countries the paper finds that bilateral trade elasticities exhibit enough of a dispersion to suggest that the direction of trade is sensitive to changes in income and prices using the bilateral elasticities as raw data the analysis obtains the associated multilateral estimates and finds that they are both consistent with the literature and suitable to addressing questions involving multilateral trade but the evidence also reveals that sole reliance on multilateral elasticities conceals valuable information for both policy applications and empirical analyses of international trade copyright 1990 by mit press

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

reconceptualising the policy mix for innovation abstract recent years have seen the emergence take up and use of the term policy mix by innovation policy makers and by policy analysts and scholars alike imported from economic policy debates the term implies a focus on the interactions and interdependencies between different policies as they affect the extent to which intended policy outcomes are achieved however the meaning of the term remains ambiguous nonetheless we argue that the emergence of the policy mix concept into common use in the field of innovation policy studies provides us with a window of opportunity to reconsider some basic and often hidden assumptions in order to better deal with a messy and complex multi level multi actor reality we draw upon a range of literatures to re conceptualise the basic building blocks of innovation policy studies in order to arrive at a useful definition of policy mix tensions and interactions of different kinds across a series of dimensions we suggest that this reconceptualisation has important implications for the future scope and focus of prescriptive and analytical innovation policy studies

income and price elasticities for exports of developing countries income and price elasticities for non oil exports of non opec developing countries play an imp ortant role in the development of policy responses to the debt crisis these elasticities are estimated for the major standard internation al trade classification commodity groups based on two stage least sq uares and quarterly data for 1973 to 1984 the income elasticity for non oil exports ranges between 1 4 and 1 9 the analysis also tests t he properties of the error term the dynamic specification and para metric stability the sensitivity of the results is assessed using sh iller s lags and band spectrum estimation copyright 1988 by mit press

contagion and trade why are currency crises regional abstract currency crises tend to be regional they affect countries in geographic proximity this suggests that patterns of international trade are important in understanding how currency crises spread above and beyond any macroeconomic phenomena we provide empirical support for this hypothesis using data for five different currency crises in 1971 1973 1992 1994 and 1997 we show that currency crises affect clusters of countries tied together by international trade by way of contrast macroeconomic and financial influences are not closely associated with the cross country incidence of speculative attacks

bilateral trade flows the linder hypothesis and exchange risk bilateral trade flows are used to examine the linder hypothesis and the effect of exchange rate variability in a gra vity type trade model derived from an underlying demand and supply mo del a behavioral model is used to justify examining these issues joi ntly the model performs well empirically using a sample of seventeen countries for the period 1974 82 the authors find overwhelming supp ort for the linder hypothesis and this version of the gravity model moreover they find strong support for the hypothesis that increased exchange rate variability affects bilateral trade flows copyright 1987 by mit press

u s bilateral trade balances and the dollar abstract u s bilateral export and import values with seven large trading partners are tested for real exchange rate effects over 1975 1985 the results suggest that dollar devaluation would have the most favorable impact on the u s trade balance in the case of japan and the least favorable in the case of canada

us indonesia trade at commodity level and the role of the exchange rate previous studies that assessed the impact of currency depreciation on inpayments and outpayments of indonesia with her major trading partners did not find much significant results especially in the trade with the united states we wonder whether insignificant link between the real rupiah dollar rate and indonesia s inpayments and outpayments with the united states is due to aggregation bias to answer this question we disaggregate the trade flows between the two countries by commodity and consider the sensitivity of inpayments of 108 us exporting industries and outpayments of 32 us importing industries from indonesia we find that most industries respond to exchange rate changes in the short run in the long run however 32 inpayments schedule and 17 outpayments schedule are significantly affected a 1 real depreciation of the dollar was found to improve us trade balance by 1 8

international financial volatility and commodity exports evidence from the thai agricultural sector using 1981 2006 data from the bank of thailand i estimate the effect of four measures of real exchange rate volatility on thai exports of five key agricultural commodities controlling for both the level of the real exchange rate and foreign incomes estimates of the effect of volatility on export volume are generally negative and often significant lending support to a range of theoretical models that predict such an effect no such relationship exists between lagged values of exchange rate volatility and agricultural production the range of results obtained using various measures of volatility suggests caution in comparing studies using different measures copyright 2010 oxford university press

exchange rate volatility and intra asia trade evidence by type of goods this paper examines the impact of intra asia exchange rate volatility on intra asia trade in primary goods intermediate goods equipment goods and consumption goods from 1980 to 2009 for asia the evidence shows that as intraregional exchange rate volatility increases intraregional exports in these goods fall this adverse impact is even more pronounced in the subregion of association of southeast asian nations asean 5 comprising asean member countries plus the people s republic of china hong kong china japan the republic of korea and taipei china and especially among intermediate and equipment exports again the impact magnifies in an even smaller subgroup excluding the smaller asean economies these results underline the significant impact of exchange rate volatility on the region s production networks for south asia however exchange rate volatility appears to have a positive impact on exports still caution is warranted given that south asian economies trade relatively little with each other

trade balance adjustment with imported intermediate goods the japanese case he purpose of this paper is to analyze the behavior of the japanese trade balance for the period of 1966 80 using a conventional elasticities approach however unlike previous works in this area our approach emphasizes the following key features of japan s foreign trade a almost all exports more than 95 in 1975 are manufactured goods b except for foods 15 2 of imports imports are either used as inputs in the manufacturing sector or manufactured goods which compete with home products consequently by concentrating on the behavior of the manufacturing sector we can explain most of the components of exports and imports in view of this we estimate a model of the manufacturing sector in which firms in the sector use imported fuels and raw materials as inputs and produce outputs sold in both foreign and domestic markets the demand for fuels and raw materials and the supplies of output or output prices in the domestic and foreign markets are all derived from a profit maximizing behavior of the manufacturing sector thus imports of fuels and raw materials are treated as derived demands the most important advantage of such an approach is that we shed light on interactions between domestic and foreign markets on the one hand and between exports and imports on the other this is in sharp contrast to the traditional demand for imports supply of exports approach which estimates each component of the trade balance separately another advantage of our approach is that on the exports side a simultaneous equation estimation method is adopted that is we estimate an export supply or export price equation as well as an export demand equation the importance of this method has been recognized by for example goldstein and khan 1978 these advantages of the approach enable us to capture a number of important features of japan s foreign trade in the analysis of exchange rate effects on the trade balance the following aspects are emphasized first a depreciation of the exchange rate may be partially offset by a change in export price in the opposite direction the magnitude of this offsetting effect is determined by the impacts on export price of competitors price and prices of imported intermediate goods second the impact of depreciation on the trade balance may also be weakened because depreciation raises the price of domestic manufactured goods and decreases people s incentive to switch from foreign to domestic manufactured goods third as stated above imports of fuels and raw materials are derived demands therefore price elasticities of these may not be very large in the short run among other variables affecting the trade balance we focus on cyclical variables such as domestic and foreign incomes there are direct effects of domestic income on the imports of intermediate goods and of foreign income on exports in addition we are especially interested in testing whether or not a domestic recession creates a pressure to increase exports such a possibility has been studied in the literature on the capacity pressure hypothesis see for example dunlevy 1980 in the following we first explain the framework of the analysis and estimate equations for the components of the trade balance the estimates are then used to assess quantitatively the importance of each of the mechanisms discussed above it is shown that all these interrelationships between various components of the trade balance are important we then proceed to present some simulation results that show the effects of exchange rate cyclical variables and input prices on the trade balance they indicate that exchange rate changes exert a quick but not very large impact on the trade balance an increase in the price of fuels leads to an immediate and significant worsening of the trade balance most important cyclical variables have crucial effects on the trade balance it is received for publication april 5 1982 revision accepted for publication december 10 1982 osaka universitv this paper is a substantially revised version of the first half of chapter 4 of the author s ph d dissertation at m i t the author would like to thank stanley fischer anonymous referees of this review and the participants in seminars at the university of tokyo the bank of japan economic planning agency and the ministry of international trade and industry japan for useful comments on earlier versions of the paper

exchange rate variability and the export demand for malaysia s semiconductors an empirical study this article examines the effects of exchange rate variability on export demand for semiconductors which is the largest sub sector of electronics industry in malaysia as reported by malaysian industrial development authority mida 2004 the empirical results which are estimated based on the johansen s multivariate cointegration tests and error correction model suggest that there is a unique long run relationship among quantities of export relative price real foreign income and real exchange rate variability the major finding of this article is that the variability of real exchange rate has some effect on semiconductor exports in both the long run and the short run in the light of rapid advances in technology in the global markets for electronics products the findings are useful to policy makers for the design and target of appropriate exchange rate and industrial policies to enhance the export competitiveness of semiconductor industry

the effects of exchange rate variability on international trade a meta regression analysis the trade effects of exchange rate variability have been an issue in international economics for the past 30 years the contribution of this article is to apply meta regression analysis mra to the empirical literature on average exchange rate variability exerts a negative effect on international trade yet mra confirms the view that this result is highly conditional by identifying factors that help to explain why estimated trade effects vary from significantly negative to significantly positive mra evidence on the pronounced heterogeneity of the empirical findings may be instructive for policy first by establishing that average trade effects are not sufficiently robust to generalize across countries and second by suggesting the importance of hedging opportunities hence of financial development for trade promotion for the practice of mra we make a case for checking the robustness of results with respect to estimation technique model specification and sample

has exchange risk depressed international trade the impact of third country exchange risk abstract this paper argues that the effect of exchange risk on bilateral and aggregate trade flows should be analyzed by including the impact of third country exchange risk factors in addition to direct bilateral or multilateral risk after a theoretical examination of these effects us bilateral export flow to its six largest trading partners are analyzed empirically i find individuality and jointly significant third country risk effects in most cases in contrast to some recent bilateral efforts i find a steadily growing negative impact on trade flows from exchange risk during floating and in contrast to recent aggregate trade flow studies i conclude that there was no temporary decline in exchange risk during the late 1970s

fixed exchange rates and trade abstract a classic argument for a fixed exchange rate is its promotion of trade empirical support for this however is mixed while one branch of research consistently shows a small negative effect of exchange rate volatility on trade another more recent branch presents evidence of a large positive impact of currency unions on trade this paper helps resolve this disconnect our results which use a new data based classification of fixed exchange rate regimes show a large significant effect of a fixed exchange rate on bilateral trade between a base country and a country that pegs to it these results suggest an economically relevant role for exchange rate regimes in trade determination since a significant amount of world trade is conducted between countries with fixed exchange rates

robust non parametric measures of exchange rate variability changes in exchange rates are well known to possess non gaussian distributions yet in testing for differences in exchange rate volatility few researches have examined measures that do not assume gaussian data this paper develops a robust non parametric measure for comparing exchange rate variability across time the measures are applied to monthly exchange rate data to test for differences in exchange rate variability across different monetary policy regimes the comparison show inconsistencies between conclusions based on the classical f test and the robust non parametric equivalent using the robust test for changes in exchange rate variability we do not conclude that variability has increased over time increases in variability do occur but usually only in specific percentiles of the data

in honor of paul krugman winner of the john bates clark medal paul krugman is the winner of the 1991 john bates clark medal given every two years to that american economist under forty who is adjudged to have made a significant contribution to economic thought and knowledge i shall attempt to convey a flavor of krugman s research contributions grouped into some major themes product diversity and monopolistically competitive trade oligopoly and strategic trade policy the dynamics of trade and exchange rates and much more finally i discuss his brilliant popular book the age of diminished expectations 1991

conditional variance and the risk premium in the foreign exchange market abstract we investigate the existence of a risk premium in the foreign exchange market based on the conditional variance of market forecast errors the forecast errors are assumed to follow the arch process introduced by engle 1982 estimation and diagnostic testing of the model are discussed and results are presented for the currencies of the united kingdom france germany japan and switzerland