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

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

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

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

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

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

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

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

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

earnings management under price regulation empirical evidence from the spanish electricity industry abstract this paper analyses the effect of price regulation on the accounting policy of spanish electricity companies over the period 1991 2001 as predicted by the political costs hypothesis watts and zimmerman 1986 watts r l zimmerman j l 1986 positive accounting theory prentice hall englewood cliffs nj managers artificially reduce reported earnings when the government establishes tariff increases in this way companies attempt to diminish their political visibility and counteract social outcry arising from the government s decision several abnormal accruals models existent in the literature are used to obtain a proxy for managerial accounting discretion on earnings

correctly analysing the balance of payments constraint on growth the balance of payments constrained growth bpcg model provides an interesting hypothesis regarding economic growth the main implication is that world demand places the dominant constraint to which individual country growth adjusts i discuss this implication and argue that tests of the bpcg model have essentially been tests of the hypothesis that trade is balanced over the long run a plausible hypothesis but one that need not hold mainly through responses to world demand as transmitted via income elasticities i then discuss the role of relative prices and investment point out logical inadequacies in the traditional bpcg framework and suggest an alternative theoretical framework to investigate its robustness our theoretical and empirical explorations suggest that traditional tests of the bpcg model may be misleading including investment as a proxy for the capacity to export and addressing endogeneity issues for example noticeably weakens the influence of world demand the evidence presented contributes to reconciling evidence supporting the bpcg hypothesis with recent work that consistently finds an important role for the level of the real exchange rate and investment independently of world demand

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

empirical studies of financial innovation lots of talk little action this paper reviews the extant empirical studies of financial innovation adopting broad criteria we could find only somewhat more than two dozen studies and since some financial innovations are examined by more than one study they cover only seventeen phenomena especially striking is the fact that only two studies offer tests of the broad hypotheses concerning the environmental conditions spurring financial innovation e g regulation taxes unstable macroeconomic conditions and ripe technologies that have been advanced in descriptive articles we offer some tentative conjectures as to why empirical studies of financial innovation are comparatively rare among our suggested culprits is an absence of accessible data we urge financial regulators to undertake more surveys of financial innovation and to make the survey data more available to researchers

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

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

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

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

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

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

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

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

the performance of internet based business models evidence from the banking industry the initial internet bank startups tended to underperform branching bank startups this suggested that internet only business models were not economically viable for banks however firms that pioneer new business models may benefit substantially from experience as they grow older and firms that use automated production technologies may benefit from scale effects as they grow larger econometric analysis of internet only bank startups finds strong evidence of the latter but not the former effect the results suggest that internet only banking success depends on attaining sufficient scale and strong management practices

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

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

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

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

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

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

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

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

international perceptions of cost constraints on voluntary information disclosures a comparative study of u k and u s multinationals the main purpose of this paper is to examine the cost constraints on voluntary information disclosure in a comparative study of the perceptions of financial executives in u k and u s multinationals the study examines the perceived net costs or benefits of disclosing information voluntarily the types of costs involved and the significance of cost constraints in respect of specific items of disclosure the results suggest that while there is substantial agreement on the major cost constraints involved and the individual items giving rise to major net costs there are significantly different perceptions by u k and u s financial executives in terms of the overall emphasis of responses to the issue of cost constraints on voluntary information disclosures

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

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

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

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

determinants of the corporate decision to capitalize interest abstract until 1974 firms could choose within gaap to capitalize or expense interest costs associated with capital expenditures the predominant practice had been to treat interest as a period expense however in 1974 the securities and exchange commission imposed a moratorium on further adoption of interest capitalization by non regulated firms this study empirically examines economic factors potentially influencing firms decisions to expense or capitalize interest prior to the sec moratorium we hypothesize that the choice may be affected by 1 the existence of management compensation agreements tied to reported earnings 2 debt covenant constraints and 3 the political costs for some firms of reporting higher earnings when compared to the control group our findings are that 1 the frequency of explicit management compensation packages was not greater for the interest capitalization group 2 firms with financial ratios closer to likely debt agreement constraints on dividends interest coverage and leverage tended to elect interest capitalization and 3 other than the largest firms in the politically sensitive petroleum refining industry the larger firms were more likely to capitalize interest

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

economic determinants of accounting policy choice the case of current cost accounting in the uk this study seeks to identify economic and financial characteristics that distinguish three groups of companies classified by response to the u k s mandatory cca standard ssap 16 as loyal compliers early defectors and hard line noncompliers three major explanatory variables emerge leverage firm size and the fixed assets to total assets ratio overall results suggest that a major motivation for compliance was lower income reporting especially as an argument for continuing recognition of cca for tax and regulatory purposes the belief that noncompliance was largely motivated by preparation costs is discounted

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

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

is the internet delivery channel changing banks performance the case of spanish banks abstract in spite of the conspicuous use of the internet as a delivery channel there is a relative dearth of empirical studies that provide a quantitative analysis of the impact of the internet on banks financial performance this paper attempts to fill this gap by identifying and estimating the impact of the adoption of a transactional web site on financial performance using a sample of 72 commercial banks operating in spain over the period 1994 2002 the impact on banks performance of transactional web adoption takes time to appear the adoption of the internet as a delivery channel involves a gradual reduction in overhead expenses particularly staff marketing and it this effect is statistically significant after one and a half years after adoption the cost reduction translates into an improvement in banks profitability which becomes significant after one and a half years in terms of roa and after three years in terms of roe the paper also concludes that the internet is being used as a complement to rather than a substitute for physical branches

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

sub saharan africa s growth south south trade and the generalised balance of payments constraint using the post keynesian balance of payments constrained growth approach we investigate the recent increase in sub saharan africa ssa growth focussing on the contribution of south south trade the model is estimated by panel co integration on a sample of 20 low and lower middle income ssa countries using annual data from 1990 to 2008 and considering three partner areas ssa itself developing asia and the rest of the world the results show that in the past decade the balance of payments constraint of ssa has been relaxed this shift has occurred through different channels of transmission the other ssa countries contributed through the real growth effect developing asia through the market share effect and the rest of the world through the terms of trade effect these results help reconcile puzzling evidence on the pattern of ssa external indebtedness and provide new insights on the role of asian drivers on ssa growth as well as on the sustainability of ssa growth recovery

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

the 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

the effects of debt covenants and political costs on the choice of accounting methods the case of accounting for r d costs abstract until 1974 firms could capitalize or expense all or part of their research and development r d costs managerial choice between these two alternatives is hypothesized to be affected by the existence of debt covenants which employ accounting numbers relating to leverage interest coverage and ability to pay dividends in addition the use of public versus private debt is hypothesized to affect the accounting choice due to differential renegotiation costs lastly a political cost hypothesis is tested this study uses a multivariate statistical technique the generalized jackknife the results suggest that firms which capitalized r d costs were more highly levered used more public debt were closer to dividend restrictions and were smaller than firms which expensed r d costs

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

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

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

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

evidence of the impact of mandatory changes in accounting principles on corporate loan agreements abstract the theory in this paper predicts that mandatory changes in accounting princples can affect the measurement rules defined in restrictive covenants in firms lending agreements consequently those mandatory changes can have an impact on the value of a firm s equity even if the changes appear to be merely cosmetic this contracting cost theory is tested by examining of both event related and cross sectional abnormal performance of the equity of a sample of firms when the accounting princples board changes accounting princples for business combinations the theory provides at best in incomplete explanation of the observed abnormal performance

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

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

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

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

the proposed introduction of current cost accounting in the u k determinants of corporate preference abstract this paper examines the corporate reaction to a major u k accounting proposal the 1976 exposure draft which called for the introduction of current cost accounting as the primary accounting convention written submissions to the u k rule making body are analyzed and four categories of preference identified probit analysis reveals that the expected cost of compliance is the most significant factor in shaping corporate preference in addition firms at risk of government investigation are more likely to support and service sector firms are more likely to oppose the proposed standard

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

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

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

the 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

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

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

import demand in heterogeneous panel data with cross sectional dependence we investigate the long run income and price elasticity of import demand functions with a heterogeneous unbalanced panel of 34 countries over the period 1985 q1 2018 q3 to estimate world elasticit

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

malmquist type indices in the presence of negative data an application to bank branches in this paper we develop an index and an indicator of productivity change that can be used with negative data for that purpose the range directional model rdm a particular case of the directional distance function is used for computing efficiency in the presence of negative data we use rdm efficiency measures to arrive at a malmquist type index which can reflect productivity change and we use rdm inefficiency measures to arrive at a luenberger productivity indicator and relate the two the productivity index and indicator are developed relative to a fixed meta technology and so they are referred to as a meta malmquist index and meta luenberger indicator we also address the fact that vrs technologies are used for computing the productivity index and indicator a requirement under negative data which raises issues relating to the interpretability of the index we illustrate how the meta malmquist index can be used not only for comparing the performance of a unit in two time periods but also for comparing the performance of two different units at the same or different time periods the proposed approach is then applied to a sample of bank branches where negative data were involved the paper shows how the approach yields information from a variety of perspectives on performance which management can use

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

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