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Currency fluctuations and the French–U.S. trade balance: evidence from 118 industries

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  • Mohsen Bahmani-Oskooee

    ()

  • Hanafiah Harvey
  • Scott Hegerty

Abstract

The impact of currency depreciations on trade has inspired a large body of research. Recent studies have examined industry-level trade, often using cointegration analysis, finding that a significant fraction of industries respond positively to devaluations. Oftentimes, adjustment lags result in a “J curve” effect, where devaluations hurt the trade balance temporarily. This study examines the specific case of trade between the United States and France, but finds that these flows are less sensitive than has been shown for other country pairs. Only 30 of 118 industries see increased trade balances after a dollar depreciation, and virtually none follow any type of a “J curve.” Certain industry sectors are more sensitive than others, however. Examining the SITC classifications of those 30 industries, we find that many of them are clustered in the SITC 700 (Machinery and Transport Equipment) and 800 (Miscellaneous Manufactured Articles) categories. In particular, clothing and footwear, as well as electrical equipment, are particularly affected. Copyright Springer Science+Business Media New York 2013

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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 40 (2013)
Issue (Month): 2 (May)
Pages: 237-257

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Handle: RePEc:kap:empiri:v:40:y:2013:i:2:p:237-257

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Web page: http://www.springerlink.com/link.asp?id=100261

Related research

Keywords: Industry trade; Bounds testing; United States; France; F31;

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  1. Glauco De Vita & Khine S. Kyaw, 2008. "Determinants of capital flows to developing countries: a structural VAR analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 35(4), pages 304-322, July.
  2. Mohsen Bahmani-Oskooee & Claire Economidou & Gour Gobinda Goswami, 2005. "How sensitive are Britain's inpayments and outpayments to the value of the British pound," Journal of Economic Studies, Emerald Group Publishing, vol. 32(5), pages 455-467, October.
  3. Bahmani-Oskooee, Mohsen & Bolhassani, Marzieh & Hegerty, Scott W., 2010. "The effects of currency fluctuations and trade integration on industry trade between Canada and Mexico," Research in Economics, Elsevier, vol. 64(4), pages 212-223, December.
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