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Seasonal Fluctuations and International Trade

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  • Mitsuhiro Kaneda

    (Georgetown University)

  • Gil Mehrez

    (Georgetown University)

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    Abstract

    This paper argues that seasonal fluctuations in international trade are large and have non-trivial effects on a country's resource allocation, production, and welfare. Using U.S. quarterly data, we find fluctuations of as much as 43% and 15% for apparel imports and exports respectively, and 7% and 12% for aggregate imports and exports respectively. In addition, we observe that seasonal fluctuations of aggregate exports have decreased substantially over time. We formulate a general equilibrium model to examine the link between changes in the size of seasonal fluctuations and the levels and variances of employment, output, and consumption. One result is that if price fluctuations increase under free trade, the traded good sector shrinks and the non- traded good sector expands. Increased trade volume can decrease fluctuations in domestic production of either good. This is verified in the data of U.S. apparel trade and production: we find that doubling of trade volume is associated with a 40% decrease in fluctuations in production.

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    Bibliographic Info

    Paper provided by EconWPA in its series International Trade with number 9809001.

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    Length: 29 pages
    Date of creation: 25 Sep 1998
    Date of revision:
    Handle: RePEc:wpa:wuwpit:9809001

    Note: Type of Document - Microsoft Word; prepared on IBM PC; to print on HP; pages: 29 ; figures: included on graph1.GIF graph2.GIF graph3.GIF graph4.GIF graph5.GIF graph6.gif graph7.gif
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    Related research

    Keywords: Seasonal Fluctuations; International Trade;

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    References

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    1. J. Joseph Beaulieu & Jeffrey A. Miron, 1990. "A Cross Country Comparison of Seasonal Cycles and Business Cycles," NBER Working Papers 3459, National Bureau of Economic Research, Inc.
    2. Canova, F. & Ghysels, E., 1992. "Changes in Seasonal Patters: Are They Cyclical," Cahiers de recherche 9216, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.
    3. Chatterjee, Satyajit & Ravikumar, B., 1992. "A neoclassical model of seasonal fluctuations," Journal of Monetary Economics, Elsevier, vol. 29(1), pages 59-86, February.
    4. Barsky, Robert B & Miron, Jeffrey A, 1989. "The Seasonal Cycle and the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 503-34, June.
    5. Gil Mehrez, 1996. "State Dependent Adjustment in an Economy with Seasonal Fluctuations," Macroeconomics 9609006, EconWPA.
    6. Anderson, Patricia M, 1993. "Linear Adjustment Costs and Seasonal Labor Demand: Evidence from Retail Trade Firms," The Quarterly Journal of Economics, MIT Press, vol. 108(4), pages 1015-42, November.
    7. Helpman, Elhanan & Razin, Assaf, 1978. "A theory of international trade under uncertainty," MPRA Paper 22112, University Library of Munich, Germany.
    8. Markusen, James R. & Melvin, James R. & Maskus, Keith E. & Kaempfer, William, 1995. "International trade: theory and evidence," MPRA Paper 21989, University Library of Munich, Germany.
    9. Beaulieu, J Joseph & MacKie-Mason, Jeffrey K & Miron, Jeffrey A, 1992. "Why Do Countries and Industries with Large Seasonal Cycles also Have Large Business Cycles?," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 621-56, May.
    10. Simon Kuznets, 1933. "Seasonal Variations in Industry and Trade," NBER Books, National Bureau of Economic Research, Inc, number kuzn33-1, July.
    11. Franses, Philip Hans, 1996. "Periodicity and Stochastic Trends in Economic Time Series," OUP Catalogue, Oxford University Press, number 9780198774549.
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