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Income Effects on the Trade Balance

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  • Kim, Yoonbai

Abstract

This paper investigates the income effects on the trade balance with particular attention to the distinction between permanent and transitory disturbances for the United States, Japan, Germany, and the United Kingdom. In all four countries, movements in the trade balance have mostly been associated with transitory changes in income. The latter also are negatively associated with the trade balance. In marked contrast, permanent changes in income have little to do with the trade balance. These results are examined in light of intertemporal models and real business cycle models. Copyright 1996 by MIT Press.

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  • Kim, Yoonbai, 1996. "Income Effects on the Trade Balance," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 464-469, August.
    • Handle: RePEc:tpr:restat:v:78:y:1996:i:3:p:464-69
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    Cited by:

    1. Milena Lipovina-Božoviæ & Maja Ivanoviæ, 2018. "Capital flows in Montenegro: SVAR model," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 36(2), pages 647-675.
    2. David Matesanz & Guadalupe Fugarolas, 2009. "Exchange rate policy and trade balance: a cointegration analysis of the Argentine experience since 1962," Applied Economics, Taylor & Francis Journals, vol. 41(20), pages 2571-2582.
    3. Yung‐Hsiang Ying & Yoonbai Kim, 2001. "An Empirical Analysis on Capital Flows: The Case of Korea and Mexico," Southern Economic Journal, John Wiley & Sons, vol. 67(4), pages 954-968, April.
    4. Mubasher Iqbal & Rukshana Kalim & Noman Arshed, 2019. "Domestic and Foreign Incomes and Trade Balance - A Case of South Asian Economies," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(4), pages 355-368, December.
    5. Miljkovic, Dragan & Paul, Rodney, 2008. "Income Effects on the Trade Balance in the United States: Analysis by Sector," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(3), pages 967-982, December.
    6. Helmut Hofer & Gerhard Runstler & Thomas Url, 2000. "The dynamic effects of aggregate supply and demand disturbances: further evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 7(1), pages 25-28.
    7. Nadenichek, Jon, 2000. "The Japan-US trade imbalance: a real business cycle perspective," Japan and the World Economy, Elsevier, vol. 12(3), pages 255-271, September.
    8. Chang, Koying & Filer, Larry & Ying, Yung-Hsiang, 2002. "A structural decomposition of business cycles in Taiwan," China Economic Review, Elsevier, vol. 13(1), pages 53-64.
    9. Kim, Yoonbai, 2000. "Causes of capital flows in developing countries," Journal of International Money and Finance, Elsevier, vol. 19(2), pages 235-253, April.
    10. Tomislav Globan, 2015. "Financial integration, push factors and volatility of capital flows: evidence from EU new member states," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(3), pages 643-672, August.
    11. Dragan Miljkovic & Rodney Paul & Roberto Garcia, 2000. "Income effects on the trade balance in small open economies," Applied Economics, Taylor & Francis Journals, vol. 32(3), pages 327-333.
    12. Marcela Veselkova & Julius Horvath, 2008. "Trade Balance and Income Shocks: Experience of Transition Economies," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 15(2), pages 241-249, September.

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