The Dynamics of Uncertainty or the Uncertainty of Dynamics: Stochastic J-Curves
That the U.S. trade account will improve in response to a depreciation is not generally in doubt; the key questions are by how much and by when. Addressing these questions involves studying the distribution of trade-account responses to a depreciation. Given a depreciation of the dollar, the paper generates this distribution by simulating a trade model with random drawings of both innovations and elasticity estimates. Unlike previous studies, this analysis explains trade on a bilateral basis and uses the Full Information Maximum Likelihood estimator for parameter estimation. According to the findings, the dispersion of trade-account responses grows over time and is directly related to the magnitude of the depreciation. Furthermore, the probability of a slow adjustment of the trade account is relatively high and the 95 percent confidence intervals are too wide to be useful for policies that target a given trade-account path. Copyright 1991 by MIT Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 73 (1991)
Issue (Month): 1 (February)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/ |
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535|
When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:73:y:1991:i:1:p:125-33. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick)
If references are entirely missing, you can add them using this form.