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On the stability of intra-industry trade

Author

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  • Hayakawa, Kazunobu
  • Okubo, Toshihiro
  • Ito, Tadashi

Abstract

This paper presents the novel finding that two-way intra-industry trade (IIT) in product–country pairs is very unstable over time by using disaggregated trade data of OECD countries. Many products frequently switch among two-way, one-way and zero trade over time. To measure the stability of two-way trade, we propose a measure that we refer to as the "IIT stability index". Our estimation results using the proposed measure show that two-way trade involving markets of different sizes and long distance are likely to be unstable. In addition, primary products are more unstable than manufactured products.

Suggested Citation

  • Hayakawa, Kazunobu & Okubo, Toshihiro & Ito, Tadashi, 2015. "On the stability of intra-industry trade," IDE Discussion Papers 542, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper542
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    Cited by:

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    2. Le Riche, Antoine & Lloyd-Braga, Teresa & Modesto, Leonor, 2022. "Intra-industry trade, involuntary unemployment and macroeconomic stability," Journal of Mathematical Economics, Elsevier, vol. 99(C).
    3. Manuel Cabral & Joana Silva, 2006. "Intra-Industry Trade Expansion and Employment Reallocation between Sectors and Occupations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 496-520, October.

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    More about this item

    Keywords

    International trade; Industry; Two-way trade; Intra-industry trade; Stability;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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