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Industry trade and exchange-rate fluctuations: Evidence from the U.S. and Chile

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  • Bahmani-Oskooee, Mohsen
  • Harvey, Hanafiah
  • Hegerty, Scott W.

Abstract

In recent years, research on the effects of currency movements on trade has used disaggregated data and error-correction and cointegration models. The resulting short-run and long-run estimates can be used to isolate not only specific industry responses, but also dynamic effects such as the “J curve.” This study examines the United States' trade balance with Chile, both at the aggregate level and for 49 individual industries. Of the 40 cointegrated industries, only ten improve in the long run after a depreciation, and only nine exhibit the temporary deterioration and eventual improvement typical of a “J curve.” We find that most effects concentrated among certain manufactures, with agricultural products and raw materials responding less to currency movements than do other commodities.

Suggested Citation

  • Bahmani-Oskooee, Mohsen & Harvey, Hanafiah & Hegerty, Scott W., 2014. "Industry trade and exchange-rate fluctuations: Evidence from the U.S. and Chile," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 619-626.
    • Handle: RePEc:eee:reveco:v:29:y:2014:i:c:p:619-626
    DOI: 10.1016/j.iref.2013.10.001
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    References listed on IDEAS

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    Cited by:

    1. Mohsen Bahmani-Oskooee & Muhammad Aftab, 2017. "Asymmetric effects of exchange rate changes on the Malaysia-EU trade: evidence from industry data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 44(2), pages 339-365, May.
    2. Chiu, Yi-Bin & Sun, Chia-Hung D., 2016. "The role of savings rate in exchange rate and trade imbalance nexus: Cross-countries evidence," Economic Modelling, Elsevier, vol. 52(PB), pages 1017-1025.

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    More about this item

    Keywords

    Industry trade; Bounds testing; United States; Chile;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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