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Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined

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  • Menzie D. Chinn

Abstract

This paper examines the stability of import and export demand functions for the United States over the 1975q1-2001q2 period. Using the Johansen maximum likelihood approach, an export demand function is readily identified. In contrast, there appears to be a structural break in the import demand function in 1995; specifications incorporating this break pass tests for cointegration, although the price elasticity is not statistically significant. Only when excluding computers and parts from the import series is a stable import demand function detected. The resulting point estimates do not exhibit the income asymmetry typically found in other studies of aggregate U.S. trade flows.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9521.

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Date of creation: Mar 2003
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Publication status: published as Menzie D. Chinn, 2005. "Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(3), pages 460-485, October.
Handle: RePEc:nbr:nberwo:9521

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  7. Cheung, Yin-Wong & Lai, Kon S, 1993. "Finite-Sample Sizes of Johansen's Likelihood Ration Tests for Conintegration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, Department of Economics, University of Oxford, vol. 55(3), pages 313-28, August.
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  14. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 12(2-3), pages 231-254.
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Cited by:
  1. Panayiotis P. Athanasoglou & Ioanna C. Bardaka, 2008. "Price and Non - Price Competitiveness of Exports of Manufactures," Working Papers, Bank of Greece 69, Bank of Greece.
  2. THORBECKE, Willem, 2009. "Can East Asia be an Engine of Growth for the World Economy?," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09006, Research Institute of Economy, Trade and Industry (RIETI).
  3. Anwar Shaikh & Gennaro Zezza & Claudio dos Santos, . "Is International Growth the Way Out of U.S. Current Account Deficits? A Note of Caution," Economics Policy Note Archive, Levy Economics Institute 03-6, Levy Economics Institute.
  4. Athanasoglou, Panayiotis & Bardaka, Ioanna, 2010. "New trade theory, non-price competitiveness and export performance," MPRA Paper 32047, University Library of Munich, Germany.
  5. Yoko Oguro, 2007. "The Influence of Intra-Industry Trade on Export Sensitivity to Exchange Rates," Hi-Stat Discussion Paper Series, Institute of Economic Research, Hitotsubashi University d07-222, Institute of Economic Research, Hitotsubashi University.
  6. Janet Ceglowski, 2014. "Has Trade Become More Responsive to Income? Assessing the Evidence for US Imports," Open Economies Review, Springer, Springer, vol. 25(2), pages 225-241, April.
  7. Claudio H. dos Santos & Anwar Shaikh & Gennaro Zezza, 2003. "Measures of the Real GDP of US Trading Partners: Methodology and Results," Economics Working Paper Archive wp_387, Levy Economics Institute.
  8. Landon, Stuart & Smith, Constance E., 2007. "The exchange rate and machinery and equipment imports: Identifying the impact of import source and export destination country currency valuation changes," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 18(1), pages 3-21, February.
  9. Olivier Blanchard & Francesco Giavazzi & Filipa Sa, 2005. "The U.S. Current Account and the Dollar," NBER Working Papers 11137, National Bureau of Economic Research, Inc.
  10. Chinn, Menzie D., 2010. "Supply Capacity, Vertical Specialisation andTrade Costs: The Implications for Aggreagate US Trade Flow Equations," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 14, Competitive Advantage in the Global Economy (CAGE).
  11. Allegret, Jean-Pierre & Sallenave, Audrey, 2014. "The impact of real exchange rates adjustments on global imbalances: A multilateral approach," Economic Modelling, Elsevier, Elsevier, vol. 37(C), pages 149-163.
  12. Margarita Katsimi & Thomas Moutos, 2006. "Inequality and the US Import Demand Function," CESifo Working Paper Series 1827, CESifo Group Munich.
  13. Jongwanich, Juthathip, 2009. "Equilibrium Real Exchange Rate, Misalignment, and Export Performance in Developing Asia," ADB Economics Working Paper Series 151, Asian Development Bank.
  14. Mizanur RAHMAN & Willem THORBECKE, 2007. "How Would China's Exports be Affected by a Unilateral Appreciation of the RMB and a Joint Appreciation of Countries Supplying Intermediate Imports?," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 07012, Research Institute of Economy, Trade and Industry (RIETI).
  15. ANDO Mitsuyo & IRIYAMA Akie, 2009. "International Production Networks and Export/Import Responsiveness to Exchange Rates: The case of Japanese manufacturing firms," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09049, Research Institute of Economy, Trade and Industry (RIETI).
  16. Yoko Oguro & Kyoji Fukao & Yougesh Khatri, 2008. "Trade Sensitivity to Exchange Rates in the Context of Intra-Industry Trade," IMF Working Papers 08/134, International Monetary Fund.
  17. Diego Bastourre & Luis Casanova & Alejo Espora, 2011. "Tipo de Cambio Real y Crecimiento: Síntesis de la Evidencia y Agenda de Investigación," Department of Economics, Working Papers 082, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.

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