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Orcutt's hypothesis revisited: evidence from commodity prices

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  • Mohsen Bahmani-Oskooee
  • Amr Sadek Hosny

Abstract

In 1950, Orcutt conjectured that trade flows respond to changes in the exchange rate faster than to changes in relative prices. Previous research that tested Orcutt's hypothesis used aggregate trade flows of one country with the rest of the world and did not find much support for the hypothesis. Due to lack of commodity prices, no study has attempted to test Orcutt's conjecture at commodity level. Now that we have come across such price data for 36 industries that trade between the USA and Egypt, we test the Orcutt's hypothesis using industry level data and provide support for the hypothesis in 50% of the cases.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Amr Sadek Hosny, 2015. "Orcutt's hypothesis revisited: evidence from commodity prices," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 11(4/5/6), pages 152-168.
    • Handle: RePEc:ids:ijpubp:v:11:y:2015:i:4/5/6:p:152-168
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    Citations

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    Cited by:

    1. Makram El‐Shagi & William C. Sawyer & Kiril Tochkov, 2022. "The income elasticity of import demand: A meta‐survey," Pacific Economic Review, Wiley Blackwell, vol. 27(1), pages 18-41, February.
    2. Mohsen Bahmani-Oskooee & Nazif Durmaz, 2017. "Evidence on Orcutt's hypothesis using Turkish–US commodity trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 26(1), pages 25-44, January.

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