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Cointegration Approach to Estimating Bilateral Trade Elasticities Between U.S. and Her Trading Partners

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  • Bahmani-Oskooee Mohsen
  • Taggert Brooks

Abstract

Almost all previous authors who estimated the trade elasticities relied upon aggregate trade data. To avoid the aggregation bias, this paper provides estimates of trade elasticities using bilateral data between the United States and her six largest trading partners. Application of cointegration analysis reveals that in many cases, bilateral trade elasticities are large enough to justify real depreciation of the dollar as a mean of improving U.S. trade balance.[F14]

Suggested Citation

  • Bahmani-Oskooee Mohsen & Taggert Brooks, 1999. "Cointegration Approach to Estimating Bilateral Trade Elasticities Between U.S. and Her Trading Partners," International Economic Journal, Taylor & Francis Journals, vol. 13(4), pages 119-128.
  • Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:119-128
    DOI: 10.1080/10168739900000048
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    References listed on IDEAS

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    1. King, Robert G. & Plosser, Charles I. & Stock, James H. & Watson, Mark W., 1991. "Stochastic Trends and Economic Fluctuations," American Economic Review, American Economic Association, vol. 81(4), pages 819-840, September.
    2. Bahmani-Oskooee, Mohsen, 1998. "Do exchange rates follow a random walk process in Middle Eastern countries?," Economics Letters, Elsevier, vol. 58(3), pages 339-344, March.
    3. Bahmani-Oskooee, Mohsen, 1986. "Determinants of international trade flows : The Case of Developing Countries," Journal of Development Economics, Elsevier, vol. 20(1), pages 107-123.
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    Cited by:

    1. Chi, Junwook, 2014. "Income and Exchange Rate Sensitivities of Cross-Border Freight Flows: Evidence from U.S.-Canada Exports and Imports by Truck, Rail, Air, and Pipeline," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 53(2).
    2. Mohammad Afzal, 2010. "Exchange Rate and Reserves in Asian Countries: Causality Test," Global Economic Review, Taylor & Francis Journals, vol. 39(2), pages 215-223.
    3. Ammar Hamad Khalaf, 2011. "Impact of Financial Liberalization on Financial Depth in Iraq," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 3(2), pages 063-074, December.
    4. repec:ris:badest:0532 is not listed on IDEAS
    5. Kurtovic, Safet & Halili, Blerim & Maxhuni, Nehat, 2016. "Bilateral Trade Elasticity: B&H versus its seven trade partners," MPRA Paper 72297, University Library of Munich, Germany.
    6. Jana Šimáková, 2016. "Assessing the Exchange Rate Sensitivity of Bilateral Agricultural Trade in Visegrad Countries," Working Papers 0033, Silesian University, School of Business Administration.
    7. Hernando Rendón Obando & Andrés Ramírez Hassan, 2005. "Condición Marshall-Lerner: una aproximación al caso colombiano, 1980-2001," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT, April.
    8. Irandoust, Manuchehr & Ekblad, Kristin & Parmler, Johan, 2006. "Bilateral trade flows and exchange rate sensitivity: Evidence from likelihood-based panel cointegration," Economic Systems, Elsevier, vol. 30(2), pages 170-183, June.
    9. Murad, S. M. Woahid, 2012. "Bilateral Export and Import Demand Functions of Bangladesh: A Cointegration Approach," MPRA Paper 36919, University Library of Munich, Germany.
    10. S Shahnawaz, 2004. "Market Power and Unites States Sectoral Textile Imports," Economic Issues Journal Articles, Economic Issues, vol. 9(2), pages 69-84, September.
    11. Mohsen Bahmani-Oskooee & Marzieh Bolhasani, 2008. "The J-Curve: Evidence from commodity trade between Canada and the U.S," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 32(3), pages 207-225, July.
    12. SHIMIZU Junko & SATO Kiyotaka, 2015. "Abenomics, Yen Depreciation, Trade Deficit, and Export Competitiveness," Discussion papers 15020, Research Institute of Economy, Trade and Industry (RIETI).
    13. Sami Khedhiri, 2013. "A Panel Cointegration Analysis of the Canadian Trade Balance," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 93-100.
    14. Mohsen Bahmani-Oskooee & Marzieh Bolhasani, 2011. "How Sensitive is U.S.-Canadian Trade to the Exchange Rate: Evidence from Industry Data," Open Economies Review, Springer, vol. 22(1), pages 53-91, February.
    15. Cortes, Maria, 2007. "Examining Patterns of Bilateral Trade between Australia and Colombia by Using Cointegration Analysis and Error-Correction Models," Economics Working Papers wp07-20, School of Economics, University of Wollongong, NSW, Australia.
    16. Mohsen Bahmani & Hanafiah Harvey & Scott W. Hegerty, 2013. "Empirical tests of the Marshall-Lerner condition: a literature review," Journal of Economic Studies, Emerald Group Publishing, vol. 40(3), pages 411-443, May.
    17. Mohammad Afzal, 2007. "The Impact of Globalisation on Economic Growth of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 723-734.

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