Estimating Trade Elasticities for World Capital Goods Exports
AbstractCapital goods exports exceed $3 trillion and are volatile. This paper estimates trade elasticities for capital goods exports. For the UK and the U.S., exports depend on exchange rates. For Germany and France they do not. For Japan, exports to non-Asian countries depend on exchange rates and exports to Asian countries depend on Asia's exports to the rest of the world. For all countries, capital exports depend on GDP in the importing countries. These results imply that U.S. exports tumbled in 2009 because the dollar appreciated and global growth slowed. They also indicate that Japanese exports crashed because of the perfect storm of a yen appreciation, a global slowdown, and a collapse in Asia's exports.
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Bibliographic InfoPaper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12067.
Length: 31 pages
Date of creation: Oct 2012
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-03 (All new papers)
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- Mohsen Bahmani-Oskooee & Zohre Ardalani, 2006. "Exchange Rate Sensitivity of U.S. Trade Flows: Evidence from Industry Data," Southern Economic Journal, Southern Economic Association, vol. 72(3), pages 542-559, January.
- Thorbecke, Willem, 2008. "Global imbalances, triangular trading patterns, and the yen/dollar exchange rate," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 503-517, December.
- Robert J. Vigfusson & Nathan Sheets & Joseph Gagnon, 2007. "Exchange rate pass-through to export prices: assessing some cross-country evidence," International Finance Discussion Papers 902, Board of Governors of the Federal Reserve System (U.S.).
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