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Exchange-rate sensitivity of commodity trade flows: Does the choice of reporting country affect the empirical estimates?

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  • Mohsen Bahmani-Oskooee
  • Scott Hegerty
  • Hanafiah Harvey

Abstract

While the effects of currency fluctuations on trade have long been of interest to economic researchers, the most recent trend in the literature is to estimate commodity trade flows between pairs of countries. This raises an important question: Does it matter which country reports the data? This study investigates 96 industries that are reported both as exports by the United States and as imports by South Korea. Since export data are FOB and import data are CIF, the Korean imports are expectedly larger than the US exports. Correspondingly, our cointegration analysis produces drastically different results between specifications. Nonparametric analysis shows that the Korean imports are more sensitive to real exchange-rate fluctuations than US exports, signifying the importance of cost of insurance and freight, as well as the data's conversion into dollars.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Scott Hegerty & Hanafiah Harvey, 2013. "Exchange-rate sensitivity of commodity trade flows: Does the choice of reporting country affect the empirical estimates?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(8), pages 1183-1213, December.
    • Handle: RePEc:taf:jitecd:v:22:y:2013:i:8:p:1183-1213
    DOI: 10.1080/09638199.2011.651154
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    Cited by:

    1. Karam Shaar, 2018. "Mortgagor Vulnerability and Deposit Affordability in New Zealand before and after the Loan-to-Value Restrictions," Reserve Bank of New Zealand Analytical Notes series AN2018/06, Reserve Bank of New Zealand.
    2. Shaar, Karam, 2017. "International trade data quality index," Working Paper Series 20138, Victoria University of Wellington, School of Economics and Finance.
    3. Shaar, Karam, 2017. "Reconciling International Trade Data," MPRA Paper 81572, University Library of Munich, Germany.
    4. Shaar, Karam, 2017. "International trade data quality index," Working Paper Series 6128, Victoria University of Wellington, School of Economics and Finance.
    5. Shaar, Karam, 2019. "Essays on modern economic issues in international trade, exchange rates and housing," Working Paper Series 16724, Victoria University of Wellington, School of Economics and Finance.
    6. Shaar, Karam, 2019. "Essays on modern economic issues in international trade, exchange rates and housing," Working Paper Series 8039, Victoria University of Wellington, School of Economics and Finance.

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