Exchange-rate risk and U.S.-Japan trade: Evidence from industry level data
Since the Bretton Woods system of fixed exchange rates broke down in 1973, the resulting increase in exchange-rate variability has introduced uncertainty into trading relationships worldwide. Has this increased volatility had an effect on Japanese-U.S. trade? To answer this question, we apply cointegration analysis to disaggregated export and import data for 117 Japanese industries from 1973 to 2006. We find that in the long run, the trade shares of most industries are relatively unaffected by increased uncertainty, while other industries experience a relative increase or decrease in their proportion of overall trade. In the short run, some industries are influenced by exchange-rate volatility, but this effect is often ambiguous. Japanese exports of certain manufactures seem to improve in the long run relative to overall trade flows. J. Japanese Int. Economies 22 (4) (2008) 518-534.
Volume (Year): 22 (2008)
Issue (Month): 4 (December)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/622903|
References listed on IDEAS
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.:
- Peree, Eric & Steinherr, Alfred, 1989. "Exchange rate uncertainty and foreign trade," European Economic Review, Elsevier, vol. 33(6), pages 1241-1264, July.
- Kenen, Peter B & Rodrik, Dani, 1986. "Measuring and Analyzing the Effects of Short-term Volatility in Real Exchange Rates," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 311-315, May.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Mohsen Bahmani-Oskooee, 2007. "Exchange rate volatility and trade flows: a review article," Journal of Economic Studies, Emerald Group Publishing, vol. 34(3), pages 211-255, August.
- Tammy A. Rapp & Nallapu N. Reddy, 2000. "The Effect of Real Exchange Rate Volatility on Bilateral Sector Exports," The Journal of Economics, Missouri Valley Economic Association, vol. 26(1), pages 87-104.
- Nicolas Péridy, 2003. "Exchange rate volatility, sectoral trade, and the aggregation bias," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(3), pages 389-418, September.
- Mohsen Bahmani-Oskooee & Rajarshi Mitra, 2008. "Exchange Rate Risk and Commodity Trade Between the U.S. and India," Open Economies Review, Springer, vol. 19(1), pages 71-80, February.
- M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
- Klein, Michael W. & Shambaugh, Jay C., 2006.
"Fixed exchange rates and trade,"
Journal of International Economics,
Elsevier, vol. 70(2), pages 359-383, December.
- Michael W. Klein & Jay C. Shambaugh, 2004. "Fixed Exchange Rates and Trade," NBER Working Papers 10696, National Bureau of Economic Research, Inc.
- G De Vita & A Abbott, 2004. "Real Exchange Rate Volatility and US Exports: An ARDL Bounds Testing Approach," Economic Issues Journal Articles, Economic Issues, vol. 9(1), pages 69-78, March.
- K. Aristotelous, 2002. "The impact of the post-1972 floating exchange-rate regime on US exports," Applied Economics, Taylor & Francis Journals, vol. 34(13), pages 1627-1632.
- Padma Gotur, 1985. "Effects of Exchange Rate Volatility on Trade: Some Further Evidence (Effets de l'instabilitÃ© des taux de change sur le commerce mondial: nouvelles constatations) (Efectos de la inestabilidad de los t," IMF Staff Papers, Palgrave Macmillan, vol. 32(3), pages 475-512, September.
- Keith E. Maskus, 1986. "Exchange rate risk and U.S. trade: a sectoral analysis," Economic Review, Federal Reserve Bank of Kansas City, issue Mar, pages 16-28.
- Bailey, Martin J. & Tavlas, George S. & Ulan, Michael, 1987. "The impact of exchange-rate volatility on export growth: Some theoretical considerations and empirical results," Journal of Policy Modeling, Elsevier, vol. 9(1), pages 225-243.
- Ekaterini Panopoulou & Nikitas Pittis, 2004. "A comparison of autoregressive distributed lag and dynamic OLS cointegration estimators in the case of a serially correlated cointegration error," Econometrics Journal, Royal Economic Society, vol. 7(2), pages 585-617, December.
- Kroner, Kenneth F. & Lastrapes, William D., 1993. "The impact of exchange rate volatility on international trade: Reduced form estimates using the GARCH-in-mean model," Journal of International Money and Finance, Elsevier, vol. 12(3), pages 298-318, June. Full references (including those not matched with items on IDEAS)