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The Bilateral USA-Mexico Trade Balances Under Decomposed Export Data

Author

Listed:
  • Serdar Ongan

    (University of South Florida)

  • Huseyin Karamelikli

    (Karabuk University)

  • Mine Aysen Doyran

    (Lehman College)

  • Ismet Gocer

    (The University of Strathclyde)

  • Charles A. Rarick

    (Purdue University Northwest Hammond)

  • John Mellon

    (Thomas Edison State University)

Abstract

This study re-formulates and re-examines the traditional bilateral trade balance (TB) concept (ratio) in the USA-Mexico case using a different methodology. This re-examination is constructed on newly formulated decomposed-export-based TBs—namely, domestic-export-based TB and re-export-based TB. Since the undecomposed traditional total-export-based TB is expressed as a total export/import ratio, it may misrepresent the actual nature of bilateral trade of this country with Mexico because the USA also considerably re-exports to Mexico. The main empirical finding confirms the need for using decomposed-export-based TBs in trade models for the USA since the impacts of exchange rate and income on undecomposed and decomposed export-based TBs of the USA are entirely different. For example, while depreciation in the USD improves the re-export-based TB for only 13 commodities, the same change in the USD improves the domestic-export-based TB for 18. Some empirical inferences from findings are as follows: (i) Mexican consumers (MC) with a stronger Peso purchase US domestically produced commodities more than re-exported ones; (ii) MC with a weaker Peso stop purchasing US re-exported commodities more than the US domestically produced ones; (iii) MC are appreciated/depreciated-Peso-sensitive to US domestically produced commodities more than re-exported ones.

Suggested Citation

  • Serdar Ongan & Huseyin Karamelikli & Mine Aysen Doyran & Ismet Gocer & Charles A. Rarick & John Mellon, 2023. "The Bilateral USA-Mexico Trade Balances Under Decomposed Export Data," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 171-186, December.
    • Handle: RePEc:kap:jincot:v:23:y:2023:i:3:d:10.1007_s10842-023-00401-6
    DOI: 10.1007/s10842-023-00401-6
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade balance; Decomposed trade balance; USMCA; Nonlinear ARDL approach;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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