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

the effects of devaluation on the trade balance a critical view and re examination of mile s new results abstract in a often cited article miles 1979 claims to have shown empirically the validity of the global monetarist proposition that devaluations do not affect the balance of trade this paper first uses mile s own framework of analysis to reveal serious deficiencies in his methodology and tests that cast doubt on the validity of his results in a respecified trade balance equation we show that devaluations do affect the trade balance in the traditionally predicted direction the pivotal difference between the two specifications arises from our inclusion of relative price effects and longer lag structure for the exchange rate variable

short run effects of devaluation a disaggregated analysis of latin american exports conventional models examining the relationship between devaluation and exports are based on exchange rate pass through these suggest that after devaluation exports become cheaper relative to other exports and the growing export market is posited to stimulate the economy if devaluation has a differential effect across commodities countries can expect different results depending on their portfolios therefore any accurate analysis of the effects of devaluation must take into account the components of a country s export portfolio the pooled time series estimation for latin american countries reveals a negative short run relationship between real devaluation and export growth for most exports at a disaggregated level the results of this study are far reaching as they suggest that more targeted policies are better suited to stimulate exports

sticky import prices and j curves we show that devaluations lead to a j curve when imported goods are durable and import prices adjust slowly to exchange rate changes the j curve effect is caused by intertemporal speculation as import prices are low relative to future prices immediately after a devaluation

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

investment in information acquisition this paper presents a simple model in which a community must decide on the amount of real investment and investment in information so as to maximise the expected utility of consumption over two periods it is shown that under conditions involving the product of the elasticity of the marginal utility of consumption and the elasticity of the production function that optimal real investment is either a monotone function of the information or is independent of it in the former case information is of value and it is optimal to invest a positive amount in information acquisition in the latter case information has no value and society devotes no resources to information acquisition

flexible exchange rates and the j curve an alternative approach abstract estimates of the j curve that do not explicitly account for feedback effects may give misleading results in the absence of a structural model a var approach is recommended to solve this problem

the new economics of agriculture agriculture in the twentieth century was characterized first and foremost by technological innovation that began in the industrialized world and spread to the developing countries as the green revolution this revolution in biological chemical and mechanical technology made it possible for agricultural production to grow faster than the demand for food despite a rapidly growing world population the result was a decline in real agricultural commodity prices throughout this era a trend that is expected by many researchers to continue at least into the early part of the twenty first century antle et al johnson 1998 rosegrant and ringer at the same time virtually all governments intervened in their agricultural sectors through a wide array of policies resulting in a pattern of net taxation of agriculture in low income countries and subsidization of agriculture in high income countries this set of events and the agricultural economics literature that was generated to explain them is what i will refer to here as the economics of agriculture in the twentieth century a stylized demand andsupply model of an agricultural market can be used to represent these relationships with output prices p income i population n factor prices w capital k technology t and government policy g

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

heterogeneous effects of competitiveness shocks on macroeconomic performance across euro area countries this paper considers how competitiveness impacts macroeconomic performance in 11 euro area countries var models are estimated for the individual countries using quarterly data from 1995q4 to 2013q4 besides unit labour costs as a competitiveness measure the models include gdp the current account balance and domestic credit the empirical analyses show that changes in unit labour costs help explain gdp dynamics in the short and medium term in most countries whereas they have little explanatory power for the current account balance or domestic credit for most countries overall the effects of the unit labour costs vary substantially across the countries in the euro area the heterogeneity suggests that policy measures aiming to improve economic growth correct current account imbalances and ensure financial stability need to take country specific features into account

investment in real assets and information acquisition the oce preferences case abstract an agent optimizes over real investment and investment in information acquisition while maximizing a two period utility that captures his ordinal certainty equivalent oce preferences optimal investment is characterized and the impact of risk and time preferences on it is investigated

exchange rate policy and trade balance a cointegration analysis of the argentine experience since 1962 using multivariate cointegration tests for nonstationary data and vector error correction models this article examines the determinants of trade balance tb for argentina over the last forty to fifty years taking into account that the short run impacts of currency depreciation on the tb behaviour may differ from the long run effects our investigation confirms the existence of long run relationships among tb real exchange rate rer and foreign and domestic incomes for argentina during different rer management policies based on the estimations the marshall lerner condition is checked and by means of impulse response functions we trace the effect of a one time shock to the rer on the tb not finding support for a j curve pattern in the short run

remittances and the dutch disease phenomenon evidence from the bounds error correction modelling and a panel space remittances have grown in size and importance they are also among the most stable inflows of scarce foreign exchange for the developing world while such inflows can boost economic growth they ca

taiwan s trade imbalance and exchange rate revisited this article applies the recently developed econometric method of autoregressive distributed lag ardl model to re examine the relationship between the exchange rate and bilateral trade imbalance for taiwan and its several trading partners china hong kong the us japan south korea and malaysia the implication of this issue is critical to policy makers particularly after china and taiwan joined the world trade organization wto in late 2001 and early 2002 respectively the empirical evidence shows a stable long run relationship of bilateral trade balance and real exchange rate between taiwan and its trading partners except japan other findings indicate that except for the us there is no specific pattern supporting the j curve phenomenon for these trading partners

tests and confidence intervals for a class of scientometric technological and economic specialization ratios in economic scientometric and innovation research often so called specialization indices are used these indices measure comparative strengths or weaknesses as well as specialization profiles of the observation units with respect to certain criteria such as patenting and publication or trade activities they allow question like is germany specialized in the export of motor vehicles or is the uk specialized in biotech patents unfortunately little is known about their statistical properties which makes valid inferencing difficult in this article we prove asymptotic normality for a certain class of scientometric technological and some economic though nonmonetary specialization indices we provide asymptotic confidence intervals and demonstrate in an example how to obtain statistically sound results we will also address the problem of normalization of these indicators all procedures proposed are provided in an add on package for r statistical environment

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

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

dynamics of the trade balance and the terms of trade in ldcs the s curve abstract in their analysis of the dynamic behavior of terms of trade and the trade balance backus kehoe and kydland found that the lead and lag correlation between these two variables is s shaped for a set of oecd countries furthermore they show that this s curve can be replicated by a two country dynamic general equilibrium model surprisingly the s curve also describes the dynamic relationship between terms of trade and the trade balance for a large set of ldcs this s curve can also be reproduced by a small open economy model which captures some important features of ldc economies the s curve is unexpectedly robust to variations in the key parameters of the model the model also captures the business cycle properties of the ldc data

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

import content of exports and j curve effect this article investigates how the response to devaluation of trade balance is affected compared to j curve hypothesis by the presence of imported inputs in the production of exports using first the almon lag technique and then the cointegration and the generalized impulse response function analysis the j curve effect is examined in two sectors of turkish economy manufacturing and mining which use imported inputs at different rates based on the data covering the period from the first quarter of 1986 to the third quarter of 1998 our results indicate that in neither sector j curve exists and that the violation of the j curve effect is more severe in the sector with higher import content

the new food economy consumers farms pharms and science the new food economy is bigger broader faster and more demanding it is a kaleidoscope of foods firms consumers countries contracts and agreements that provide us with a dizzying vision of moving targets we have witnessed the food and agricultural industry move from a set of independent producers and marketing firms to a set of integrated and highly managed supply chains we have witnessed the development of demand chains as consumers and retailers demand differentiated products identity preservation and special food attributes and now we are watching linear demand and supply chains morph into webs of activities and tasks that are undertaken not by well defined or selfcontained firms or households but by multiple parties up and down the food chain at least half of the presidents of this association since 1990 spoke from this podium about new broader definitions of agriculture and about the creativity of us agricultural economists in finding new questions to ask and economic agents to analyze johnston houck armbruster schmway antle warren johnston likened us to black footed ferrets who continually find new ecological niches within which to thrive johnston p 1115 our former presidents saw the new

devaluation and the trade balance in india stationarity and cointegration a study of devaluation and the trade balance in india corrects the data for nonstationarity previous empirical tests have used non stationary data the trade balance in india is not cointegrated with a number of variables including the exchange rate absorption elasticity and monetary models are compared and the monetary model performs better there has been no j curve in india and devaluations have had no significant long run effect on the trade balance

the u s current account a long and short run empirical perspective the persistence of the u s current account deficit is thought to be one of america s foremost economic problems an omen of a decline in u s economic hegemony that seems even more foreboding in the wake of plans for europe 1992 the u s current account balance began its sustained decline in the third quarter of 1982 having earlier hovered anywhere from an annualized surplus high of 22 2 billion to a deficit low of 26 64 billion between 1973 and 1982 beginning in the third quarter of 1982 the u s current account balance registered an annualized deficit of 29 billion this would be but one of many yet one of the smallest steps down the road to the triple digit deficits that have endured throughout the 1980s and remain today is the persistence of the current account deficit now in its eighth year an indication of a trend which fiscal prudence exchange rate intervention increases in u s competitiveness or demand stimulus abroad cannot suspend in the long run these issues are investigated by using the more recent work on unit roots and cointegration applications that have not yet been made regarding trade issues and trade related data granger causality tests are also used to investigate the short run causes of the current account deficit

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

the exchange rate and the balance of trade the turkish experience in this article we examine the responsiveness of turkey s trade balance to devaluation accompanied by trade liberalisation our results show that the trade balance was responsive to changes in the exchange rate that were brought about by the economic reforms introduced in the 1980s suggesting that exchange rate policy was able to create and maintain a satisfactory balance of trade position in the 1980s and early 1990s

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

anticipated versus unanticipated terms of trade shocks and the j curve phenomenon abstract using a dynamic stochastic general equilibrium dsge model we examine the impact of anticipated and unanticipated terms of trade tot shocks on aggregate output inflation and the trade balance tb this allows us to offer an alternative explanation of the j curve phenomenon we find that an unanticipated tot shock increases real output as well as inflation but the j curve phenomenon may not exist under a certain condition however under the same condition an anticipated tot shock leads to the j curve effect we find that our main result concerning the j curve phenomenon continues to hold even if the assumption of rational expectations about the tot is relaxed further analysis reveals that the presence of a cost channel of monetary policy increases the intensity of the j curve effect assuming plausible parameter values while using a more general model calibration results support our theoretical predictions

effects of exchange rate variations on bilateral trade with a vehicle currency evidence from china and singapore abstract using a testable gravity type bilateral trade model derived from an underlying demand and supply model this paper explores the effects of exchange rate variations on bilateral trade in an exchange rate regime with a vehicle currency the introduction of the vehicle currency allows us to figure out whether variations in the trade volume due to the fluctuation of the bilateral exchange rate are primarily due to changes in demand or in supply or both more specifically in this theoretical framework the appreciation of one country s currency against the vehicle currency is expected to promote its imports but the effect of revaluation of the country s currency against the vehicle currency on its exports is ambiguous moreover high volatility of the exchange rate of one country s currency against the vehicle currency is also expected to depress its import volume from the empirical point of view the decomposition of the bilateral exchange rate of two currencies into the bilateral rates of these two currencies against the vehicle currency provides a new alternative to avoid the econometric problem of potential reverse causality in assessing the effects through compiling a novel monthly bilateral trade dataset between china and singapore over 21 years or 252 months we empirically test the predictions of our model which get robust support from the results

consumption asymmetry and the stock market empirical evidence abstract this paper examines whether u s stock market value affects consumption asymmetrically using cointegration and error correction methodology the results confirm that stock market value asymmetrically affects real per capita consumption negative news affects consumption more than positive news

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

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

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

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

a note on demand for information the oce preferences case abstract this paper considers the optimal decisions of an investor with ordinal certainty equivalent preferences we prove that if risk preferences are of the constant absolute risk aversion type optimal demand for the risky asset and information are independent of time preferences

accounting for us current account deficits an empirical investigation the sources of us current account deficits are investigated using a number of macroeconomic variables and a vector error correction model the variables are those typically emphasized by the traditional income expenditure approach and the intertemporal ricardian approach the results indicate that macroeconomic variables explain the current account reasonably well and the evidence seems to support the traditional approach where budget deficits and increases in real interest rates and terms of trade are associated with current account deficits

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 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

bilateral j curve between the uk vis a vis her major trading partners currency depreciation is said to worsen the trade balance first before resulting in an improvement yielding a short run pattern labelled the j curve phenomenon while early studies tested the j curve by using aggregate trade data a few recent studies have employed bilateral data mostly between the us and her major trading partners in this paper we extend the literature by considering the experience of the uk we test the phenomenon between the uk and her twenty major trading partners by employing data over 1973q1 2001q3 period in most instances we find no support for the j curve in the short run in the long run only in five cases has the exchange rate had significant impact on the bilateral trade balance

the j curve and nafta evidence from commodity trade between the us and mexico the north american free trade agreement nafta was predicted to have a substantial impact on the us mexico trade especially on specific importing and exporting industries in this article we use annual industry level export and import data from 1962 to 2004 to discern both the short and long run effects of real exchange rate depreciation on the mexico us trade balance as well as the effects of nafta on this trade we find that peso depreciation has a positive long run effect on 24 of 102 mexican industries and a negative short run effect on 19 of 102 industries only a small fraction 7 of 102 industries show any support for the j curve hypothesis nafta has had a significant effect on a significant number of the industries however

do exchange rate changes have symmetric or asymmetric effects on the trade balances of asian countries abstractrecently the linear ardl approach was modified and a non linear version of the same approach that is used mostly to assess asymmetric effects of some exogenous variables on the dependent variable was introduced the non linear model was recently used by one study to show that indeed exchange rate changes have asymmetric effects on the trade balance of a few advanced countries the same was demonstrated for transition economies by another study in this article we provide additional asymmetric effects from seven asian economies by showing that in most cases we find evidence of short run and long run asymmetric effects of exchange rate changes on the trade balance like other studies our findings are country specific

dynamics of the trade balance and the terms of trade the j curve the authors provide a theoretical interpretation of two features of international data the countercyclical movements in net exports and the tendency for the trade balance to be negatively correlated with current and future movements in terms of trade but positively correlated with past movements they document the same properties in a two country stochastic growth model in which trade fluctuations reflect in large part the dynamics of capital formation the authors find that their general equilibrium perspective is essential the relation between the trade balance and the terms of trade depends critically on the source of fluctuations copyright 1994 by american economic association

the j curve revisited an empirical examination for the united states abstract this paper examines empirical evidence for trade prices and quantities for the united states to determine whether j curve effects have occurred in recent history empirical estimates of exchnage rate pass through and trade volume responses to exchange rate changes for the 1967 to 1987 period indicate that the often told tale of trade balance deterioration and then improvement the j shaped adjustment path has not typically been experienced by the united states expenditures on imports have typically increased following dollar depreciations primarily as a result of relatively inelastic import volume responses export earnings have been seen to rise only marginally during these same dollar depreciations due to increases in export prices and the subsequent reductions induced in export volume the long run merchandise trade balance adjustment path is seen to resemble a sine wave rather the a j

the effects of the yuan dollar exchange rate on agricultural commodity trade between the united states china and their competitors the united states claims that the undervaluation of chinese currency the yuan causes u s exports to china to decrease and imports from china to increase furthermore because the yuan is undervalued only against the dollar u s competitors have an advantage in exporting to china and china has an advantage over its competitors in exporting to the united states this study develops a theoretical model to analyze the effect of the yuan undervaluation on prices supply demand and trade in the united states china and their competitors this study applies a cointegration error correction model to empirically quantify the short run and long run effects of the devaluation of the yuan on important agricultural commodities traded between the united states china and their competitors these commodities include chinese imports of milk soybeans and cotton from the united states and u s imports of beans fruit juice and fruit from china the results show that yuan devaluation causes chinese imports of u s milk soybeans and cotton to decline and u s imports of beans fruit juice and fruit from china to increase in the short run and in the long run

import prices export prices and the current account an asymmetry abstract we demonstrate that there is an important asymmetry between the effects of temporary import and export price shocks on the current account that is ignored in theoretical and empirical work this asymmetry is found to hold for u s and u k data

the j curve dynamics of turkey an application of ardl model this article seeks an empirical evidence for the existence of the j curve phenomenon both in the short run and long run for turkey over the period 1980 2005 the bounds testing cointegration approach is employed to estimate the trade balance model an augmented form of granger causality analysis is implemented between trade balance real effective exchange rates foreign income and domestic income the stability of the short run as well as long run coefficients in the trade balance model is tested too the empirical results suggest that the j curve phenomenon is supported only in the short run whilst causality tests reveal mix results the parameter stability tests seem to be inconclusive

impacts of the us dollar usd exchange rate on economic growth and the environment in the united states abstract this paper investigates the impact of the usd exchange rate on economic growth and the environment in the united states by using a structural vector autoregression svar model the analysis is based on quarterly country level data on the real trade weighted us dollar index petroleum consumption renewable energy consumption net imports of pollution intensive products real gdp and co2 emissions during the 1989 2015 the result shows that the usd exchange rate is positively related to petroleum consumption net imports of the united states in pollution intensive industries with major u s trading partners real gdp and co2 emissions moreover petroleum consumption increases real gdp and domestic co2 emission levels while net imports of pollution intensive products decrease real gdp and does not significantly affect co2 emissions

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

flexible exchange rates prices and the role of news lessons from the 1970s recent experience with flexible exchange rate systems has led to renewed interest in the operation of foreign exchange markets as reflected in many recent studies of the principal determinants of exchange rates the 1970s witnessed the dramatic alteration of the international monetary system from a regime of pegged exchange rates which prevailed for about a quarter of a century since the bretton woods conference into a regime of flexible though managed rates as a consequence of the emergence of the new legal and economic system traders national governments and international organisations were confronted with new economic problems choices and instruments during the 1970s ex change rates fluctuated widely and inflation rates accelerated the international monetary system had to accommodate extraordinarily large oil related shocks which affected trade flows in goods and assets huge oil payments had to be recycled uncertainties concerning future developments in international politics reached new heights and the prospects for the world economy got gloomier these developments placed unprecedented pressures on the markets for foreign exchange as well as on other asset markets they were associated with a large slide in the value of the us dollar and resulted in speeding up the creation of new institutions like the european monetary system which provided the formal framework for the management of exchange rates among members

arima and cointegration tests of ppp under fixed and flexible exchange rate regimes real exchange rates between the united states and its major trading partners were calculated for the bretton woods and flexible exchange rate periods unit root tests indicate that purchasing power parity performed poorly in both periods tests for cointegration reveal limited instances in which it is possible to estimate the deviations from ppp as an error correcting model the estimated error correcting models indicate that foreign but not u s prices responded to deviations from ppp frenkel s 1981b finding that purchasing power parity ppp worked better during the 1920s than the 1970s caused considerable controversy for example davutyan and pippenger 1985 contend that the socalled collapse of ppp is a result of an increase in the relative importance of real versus monetary shocks they argue that the 1970s as opposed to the 1920s was characterized by real supply shocks and the international coordination of monetary policies the argument is that ppp did not fail rather there was an increase in the volatility of those factors giving rise to deviations from ppp hakkio 1984 reestimated ppp over the 1920s and 1970s using cross country tests i e sure estimates to improve the efficiency of his estimates he was able to support the hypothesis that ppp worked better in the 1970s than in the 1920s on the other hand papers by adler and lehman 1983 dornbusch 1980 frenkel 1981a junge 1985 and krugman 1978 report findings contrary to the ppp hypothesis moreover kenen and rodrik 1986 find that the volatility of real exchange rates has increased throughout the flexible rate period this paper tries to shed some light on the importance and persistence of the observed deviations from purchasing power parity under alternative exchange rate systems while it is interesting to compare ppp in the 1920s versus the 1970s it is equally useful to compare the 1960s versus the 1970s and 1980s if real supply shocks and lack of monetary coordination are characteristic of the latter period ppp should perform better in the 1960s to illustrate the issues involved consider the following econometric model of relative purchasing power

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

structural change and the recognition of diversity perestroika is not a new reality for north american agriculture structural adjustments in agriculture in rural communities and regions and in economic activities associated with the production and trading of agricultural commodities are made frequently in response to recurrent changes in economic and political conditions increased interdependence of agriculture with other sectors within the national economy and worldwide tutwiler and elliott amplifies the need for understanding the consequences of structural change including the organization and control of the sector macroeconomic and international external sources have also been ac

does the new economy measure up to the great inventions of the past abstract during the four years 1995 99 u s productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age of 1913 72 accordingly many observers have declared the new economy to be an industrial revolution even more important than the second industrial revolution of 1860 1900 which made the golden age of productivity growth possible this paper dissects the recent productivity revival subtracts out a cyclical component and concludes that there is no revival of the productivity growth trend in the 88 percent of the private economy lying outside of the durables manufacturing sector the paper explains this surprising finding by pointing to limitations in computers and the internet in comparison with the great inventions of the past

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

exchange rate pass through when market share matters the authors investigate the pass through from exchange rates to import prices when firms future demands depend on their current market shares they show that profit maximizing foreign firms may either raise or lower their dollar export prices when the dollar appreciates temporarily i e the pass through may be perverse and that current import prices may be more sensitive to expected future exchange rates than to current exchange rates they present evidence that suggests the behavior of expected future exchange rates may provide a clue to the puzzling recent behavior of u s import prices copyright 1989 by american economic association

intertemporal speculation devaluation and the j curve abstract this paper presents a new explanation of why j curves i e the tendency of the trade balance to deteriorate immediately after a devaluation and to improve only as time passes may arise the paper focuses on the consequences of price stickiness if prices are sticky the devaluation leads first to asn increse in the relative price of tradables which tends to improve the trade balance and second to rising prices of tradables following the devaluation which tends to temporarily worsen the trade balance as a result of intertemporal speculation if the latter effect dominates a j curves results

are devaluations contractionary in mena countries currency depreciation reduces aggregate supply by raising cost of imported inputs and increases aggregate demand by increasing its net export component depending on the relative strength of the two effects depreciation could be expansionary or contractionary we employ the bounds testing approach to cointegration and error correction modelling to evaluate the effects of exchange rate depreciation on output growth both in the short and in the long run across a sample of mena countries exchange rate fluctuations are found to be important to fluctuations in real output growth in the short run anticipated exchange rate depreciation may induce long run expansionary or contractionary effects on output supply consistent with theory s predictions the expansionary effect of unanticipated depreciation is only transitory on output growth nonetheless unanticipated depreciation is found to have a contractionary effect on output growth in the long run via an increase in the cost of imported inputs

how sensitive is u s agricultural trade to the bilateral exchange rate evidence from bulk intermediate and consumer oriented products this article examines the dynamic effects of changes in bilateral exchange rates on changes in bilateral trade of bulk intermediate and consumer oriented agricultural products between the united states and its 10 major trading partners we find that for consumer oriented products u s exports are highly sensitive to bilateral exchange rates in both the short and long run while u s imports are mostly responsive only in the short run for bulk products on the other hand u s exports and imports are relatively insensitive to exchange rate changes in both the short and long run for intermediate products exports and imports are responsive to exchange rate changes in the short run but not in the long run it is also found that income of the united states and its trading partners has a significant effect on u s exports and imports of the three types of agricultural products in both the short and long run

impacts of rmb devaluation on china s trade balances a time varying svar approach in this article i empirically examine time varying effects of real renminbi rmb devaluation on china s trade balances to this end i estimate a time varying structural vector autoregression mod

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

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

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

the emerging u s current account deficit in the 1980s a cointegration analysis this paper seeks to understand the recent history of u s external imbalances by identifying the long run tendency of the u s current account balance and investigating its behavior the procedure that is adopted is to estimate cointegrating regressions between u s exports and imports of goods and services estimates from cointegrating regressions between several measures of u s exports and imports show that up to about the end of 1983 the u s current account tended toward zero since that time there has been an apparent structural shift resulting in a long run tendency for a deficit in excess of 100 billion per year copyright 1992 by mit press

exchange rates and the trade balance abstract the impact of the exchange rate on the trade balance is examined for a number of developing countries non structural techniques indicate that a depreciation of the real exchange rate is not strongly associated with a significant improvement in the trade balance

the j curve rational expectations and the stability of the flexible exchange rate system this paper investigates the behavior of exchange rates under the floating rate system when the trade balance responds to the exchange rate in a j curve fashion and when exchange rate expectations are rational but speculators are risk averse the major findings are i that speculators will stabilize the floating exchange rate system provided capital mobility is sufficiently high 2 unless the degree of capital mobility exceeds an even higher critical level exchange rates will oscillate around their long run equilibrium values and 3 a real unanticipated disturbance will cause the exchange rate to overshoot its long run equilibrium level

the j curve malaysia versus her major trading partners currency depreciation is said to worsen the trade balance before improving it hence the j curve phenomenon since introduction of cointegration and error correction modelling researchers have tried to distinguish the short run effects of currency depreciation from its long run effects a few studies that have investigated the experience of malaysia have relied upon aggregate trade data and have found no strong support for a significant relation between the real value of the ringgit and the malaysian trade balance in this article we disaggregate the data by country and consider malaysia s bilateral trade balance with her 14 largest trading partners using bound testing approach to cointegration and error correction modelling we provide some support for the j curve hypothesis

estimation of j curves united states and canada delayed reactions to exchange rate changes in trade on current account balances are known to exist in both the united states and canada a model has been constructed to estimate relative price effects for trade with major partners in order to determine the quantitative magnitudes and relevant time delays for both countries adjustments in trade accounts there is a distinct tendency for balances to worsen when exchange depreciation first occurs and then to improve after several quarters have passed there is also a tendency for the balances to worsen again the u s and canadian time profiles of adjustment are found to be similar