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Hysteresis in Exports

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  • Giorgia Giovannetti
  • Hossein Samiei

Abstract

This paper presents an empirical examination of the importance of hysteresis in international trade. An econometric model of export determination is developed where the presence of sunk costs causes discontinuous behavior and hysteresis so that individual exporters’ decision to stay in or out of the market depends on the current value of the exchange rate as well as its past history. The aggregate level of exports is then determined by the proportion of exporters that stay in the market. The resulting non-linear model is estimated using data on manufacturing exports for the United States, Germany, and Japan. The paper finds strong evidence in favor of the presence of pricing-to-market and hysteresis only in the case of Japanese exports.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 95/52.

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Length: 20
Date of creation: 01 May 1995
Date of revision:
Handle: RePEc:imf:imfwpa:95/52

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Cited by:
  1. Wendy Carlin & Andrew Glyn & John Van Reenen, 1999. "Export Market Performance of OECD countries: an empirical examination of the role of cost competitiveness," IFS Working Papers, Institute for Fiscal Studies W99/22, Institute for Fiscal Studies.
  2. Keld Laursen & Valentina Meliciani, 1999. "The Importance of Technology Based Inter-sectoral Linkages for Market Share Dynamics," DRUID Working Papers, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies 99-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  3. bruno amable & jerome henry & frederic lordon & richard topol, 2005. "Complex Remanence vs. Simple Persistence: Are Hysteresis and Unit-Root Processes observationally equivalent?," Computational Economics, EconWPA 0501001, EconWPA.
  4. Mahadevan, Renuka & Suardi, Sandy, 2008. "A dynamic analysis of the impact of uncertainty on import- and/or export-led growth: The experience of Japan and the Asian Tigers," Japan and the World Economy, Elsevier, Elsevier, vol. 20(2), pages 155-174, March.
  5. Alderighi Marco & Gaggero Alberto A., 2012. "Air Accessibility and Export Capability of the Italian Manufacturing Industry," L'industria, Società editrice il Mulino, Società editrice il Mulino, issue 4, pages 635-662.
  6. Gilles Saint-Paul, 2009. "Le dollar, l’innovation et l’emploi," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 94(1), pages 107-115.

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