A MethodFor Separating Iincome & Substitution Effects Of Exchange Rate Changes On Aggregate Demand
AbstractRegression estimates of exchange rate total effects on aggregate demand are broken into separate income and substitution effects. Total effects estimates can seem contrary to theory. Separating them into their two components shows this is not the case. The separation method also provides a simple test to determine if imports are normal or inferior goods. The paper finds consumer imports are normal goods, but investment imports are inferior goods. The paper shows that if import total effects exceed domestic total effects, imports are a normal good. If smaller, they are inferior goods.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Rensselaer Polytechnic Institute, Department of Economics in its series Rensselaer Working Papers in Economics with number 0901.
Date of creation: Feb 2009
Date of revision:
Find related papers by JEL classification:
- E00 - Macroeconomics and Monetary Economics - - General - - - General
- F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-14 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Baker & Jonathan Gruber & Kevin Milligan, 2001.
"The Retirement Incentive Effects of Canada's Income Security Programs,"
Social and Economic Dimensions of an Aging Population Research Papers
65, McMaster University.
- Michael Baker & Jonathan Gruber & Kevin Milligan, 2003. "The retirement incentive effects of Canada's Income Security programs," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 261-290, May.
- Michael Baker & Jonathan Gruber & Kevin Milligan, 2001. "The Retirement Incentive Effects of Canada's Income Security Programs," NBER Working Papers 8658, National Bureau of Economic Research, Inc.
- Ran Zhang & Kenneth Simons & David I. Stern, 2010. "News Media as a Channel of Environmental Information Disclosure: Evidence from an EGARCH Approach," Rensselaer Working Papers in Economics 1001, Rensselaer Polytechnic Institute, Department of Economics.
- John J. Heim, 2009. "Demand For Durable Goods, Nondurable Goods And Services," Rensselaer Working Papers in Economics 0906, Rensselaer Polytechnic Institute, Department of Economics.
- John J. Heim, 2009. "The Real Exchange Rate And The U. S. Economy 2000 - 2008," Rensselaer Working Papers in Economics 0905, Rensselaer Polytechnic Institute, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John Heim) The email address of this maintainer does not seem to be valid anymore. Please ask John Heim to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.