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Estimating Trade Elasticities for World Capital Goods Exports

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  • THORBECKE, Willem

Abstract

Capital goods exports exceed $3 trillion and are volatile. This paper estimates trade elasticities for capital goods exports. For the UK and the U.S., exports depend on exchange rates. For Germany and France they do not. For Japan, exports to non-Asian countries depend on exchange rates and exports to Asian countries depend on Asia's exports to the rest of the world. For all countries, capital exports depend on GDP in the importing countries. These results imply that U.S. exports tumbled in 2009 because the dollar appreciated and global growth slowed. They also indicate that Japanese exports crashed because of the perfect storm of a yen appreciation, a global slowdown, and a collapse in Asia's exports.

Suggested Citation

  • THORBECKE, Willem, 2012. "Estimating Trade Elasticities for World Capital Goods Exports," Discussion papers 12067, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:12067
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    File URL: https://www.rieti.go.jp/jp/publications/dp/12e067.pdf
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    References listed on IDEAS

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    1. Koichiro Kamada & Izumi Takagawa, 2005. "Policy coordination in East Asia and across the Pacific," International Economics and Economic Policy, Springer, vol. 2(4), pages 275-306, December.
    2. Robert J. Vigfusson & Nathan Sheets & Joseph E. Gagnon, 2007. "Exchange rate pass-through to export prices: assessing some cross-country evidence," International Finance Discussion Papers 902, Board of Governors of the Federal Reserve System (U.S.).
    3. Thorbecke, Willem, 2008. "Global imbalances, triangular trading patterns, and the yen/dollar exchange rate," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 503-517, December.
    4. Mohsen Bahmani-Oskooee & Zohre Ardalani, 2006. "Exchange Rate Sensitivity of U.S. Trade Flows: Evidence from Industry Data," Southern Economic Journal, Southern Economic Association, vol. 72(3), pages 542-559, January.
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