Exchange rate and foreign GDP elasticities of Swiss exports across sectors and destination countries

This article uses a detailed breakdown of Swiss trade flows to identify how the impact of the two main determinants of Switzerland’s exports – foreign demand and the real exchange rate – varies across sectors and export destinations. Our main findings are that (i) both foreign demand and exchange rate elasticities vary substantially across both export sectors and export destinations. (ii) Foreign demand trends are more important for structural considerations than the exchange rate. This is due to the fact that exports of the two largest export sectors are relatively sensitive to long-run foreign demand developments while they are relatively insensitive to changes in the exchange rate. (iii) The sectoral structure of Switzerland’s exports has shifted towards goods that have a lower short-run demand elasticity and a higher long-run demand elasticity. Goods exports are thus less influenced by business cycle fluctuations while they benefit more from long-term growth trends. (iv) The export share of sectors with a relatively low exchange rate elasticity has increased. However, this result is mainly driven by the strong rise in exports of chemicals and pharmaceuticals as well as precision instruments and watches, which are also the two important sectors responsible for the Swiss trade surplus.     

The economic and trade effects of the UK–Korea free trade agreement on the United Kingdom,Korea, Japan,China, and the European Union

We explored a comparative static computable general equilibrium model with six regions and 12 sectors to estimate the impacts of the recent UK–Korea free trade agreement (FTA) along with the European Union (EU)–Korea FTA. The empirical results provide quantitative evidence of the impact on national GDP, national exports and imports by sector, and the changes in exports or imports among the United Kingdom, Korea, Japan, China, and the EU. The UK–Korea FTA, along with the EU–Korea FTA, increases GDP and welfare for the United Kingdom and Korea; moreover, there is a large increase in automobiles, transport equipment, and machinery exports between Korea and the United Kingdom. The GDP and welfare level of non-member countries such as Japan and China will slightly decline. Exports from the United Kingdom and Korea to non-member countries are also expected to decrease in most manufacturing sectors. The UK–Korea FTA will lead to increases in imports between the United Kingdom and Korea due to mutual trade creation effects and trade diversion effects. However, non-member countries such as Japan's exports are expected to experience a large decline in automobiles to the United Kingdom and in most manufacturing products to Korea due to the negative impact of the UK–Korea FTA.     

日本对华直接投资决定因素的实证研究

运用计量模型,以1986-2007年的统计数据为基础,选取中国国内生产总值、中日双边贸易量、人民币实际汇率和中日两国实际工资差异为解释变量,针对日本对华直接投资进行实证分析,结果显示:国内生产总值、中日双边贸易量和实际汇率与日本对华直接投资正相关,实际工资差异与之负相关,且各变量均影响显著.     

人民币实际汇率波动对中美贸易收支的影响——基于1990—2009年时间序列分析

基于协整理论、误差修正模型和格兰杰因果检验并根据中国和美国1990-2009年的季度数据,分析人民币实际汇率变动对中美贸易收支的影响.结果表明:影响中美贸易收支的主要因素包括美国的实际GDP、中国的实际GDP和人民币实际汇率,且三者的影响力次第减弱,中美贸易也存在明显的J曲线效应.因此,改善中美贸易失衡应扩大中国内需、调整业口结构和改革人民币汇率制度.     

Exchange rate volatility and Irish-UK trade, 1979-1992

This study examines how exchange-rate volatility affected Ireland's exports to its most important trading partner, the United Kingdom, from 1979 to 1992. To ensure reliable inferences regarding income and price elasticities and the impact of exchange rate volatility on exports, the time series properties of the series used are investigated. The analysis here is conducted at both aggregate and 2-digit SITC Division levels since exchange rate volatility can reasonably be presumed to affect sectors differently. Since expectations matter for exchange rate determination real volatility was generated according to a first-order GARCH process. Both real and nominal volatility were important determinants for over 35% of Irish-UK trade, with positive effects predominating. This may be due to the nature of Irish firms operating in a small open economy where they have little option in dealing with increased exchange rate risk except to 'weather the storm' for fear of losing market share or facing costs of either exit, re-entry, or both.     

Exchange rate disconnect and financial constraints —evidence from Chinese firms

One puzzling observation in international economics is the lack of response of exports to exchange rate fluctuations. Employing the most comprehensive export data from China for the 2000–2007 period, we provide sector- and firm-level evidence that the response of exports to exchange rate movements depends crucially on the level of financial constraints. For sectors with large financial constraints, the response is small, whereas, for less financially constrained sectors, the response can be much larger, with the estimated elasticity decreasing with the sector's degree of financial constraints. At the firm-level, financial constraints affect the firm's response to exchange rate shocks at both the intensive and the extensive margins. At the intensive margin, financial constraints dampen the effect of exchange rate on exports by restricting the firm's export value to the existing destination market; at the extensive margin, financial constraints restrict the number of firms participating in exporting, the number of firm-product pairs being exported, and the probability of entering a new destination market.     

Does exchange rate volatility hinder export growth?

The paper examines the impact of exchange rate volatility on trade using an ARCH-in-mean model. The advantages of this statistical approach vis-a-vis earlier approaches is that it provides more efficient coefficient estimates and avoids the problem of spurious regressions. Exchange rate volatility was found to have a negative impact on Canadian and Japanese exports to the United States and on Australian exports to the world. For Sweden, the United Kingdom and the Netherlands, the relationship was found to be positive. The magnitude of the impact of a 10% increase in exchange rate volatility on export volumes was found to range from a reduction of 7.4% (Canada) to an increase of 5% (Sweden). The results indicate that exports invoiced in the importer's currency are affected negatively by exchange rate volatility, and exports invoiced in the exporter's currency are affected positively. A partial equilibrium, profit maximization model is derived to support these findings.     

A Band Spectral Analysis of Exports and Economic Growth in the United States

This paper examines the role of exports in aggregate economic growth in the United States using band spectral regression. The findings reveal a predictable relationship between long-run frequency components of real export growth and real GDP growth over the post-Bretton Woods period of flexible exchange rates. The study fails to uncover a significant relationship between long-run frequency components of the terms of trade and real output. Overall, the findings support the export-led growth hypothesis, and dismiss long-run movements in the terms of trade as an important determinant of real output growth.     

Exchange rate volatility and export growth in Nigeria

This article examines the impact of exchange rate volatility on Nigeria's exports to its most important trading-partner–the United States over the quarterly period January 1980 to April 2001. Using cointegration and vector error correction (VECM) framework, empirical tests indicate the presence of a unique cointegrating vector linking real exports, real foreign income, relative export prices and real exchange rate volatility in the long run. Furthermore, the results show that increases in the volatility of the real exchange rate raise uncertainty about profits to be made which exert significant negative effects on exports both in the short- and long-run. Our results also show that improvements in the terms of trade (represented by declines in the real exchange rate) and real foreign income exert positive effects on export activity. Most importantly, we found that the trade liberalization and economic reform policies implemented in the post-1986 structural adjustment period contributed to Nigeria's export performance. Overall, our findings suggest that Nigeria's exporting activities can be further boosted by policies aimed at achieving and maintaining a stable competitive real exchange rate.     

Veblen and Kropotkin on Human Evolution

This paper studies the spillover effects of economic fluctuations in the United States on economic activity in Latin America and the Caribbean. Fluctuations in U.S. GDP growth have spillover effects that stimulate real growth and accelerate price inflation across many countries. Underlying these spillover effects are significant movements in private consumption, and to a larger extent, private investment. Openness to the United States has significant effects that accelerate growth of exports and/or imports across many countries. The net effects on the trade and current account balances vary across countries. Overall, the evidence supports concerns about adverse spillover effects of a slowdown in the U.S. economy on neighboring countries, necessitating careful mobilization of countercyclical domestic tools to hedge against potential risk and mitigate the severity of economic downturns.     

US–Japan Trade Frictions: The Past,the Present,and Implications for the US–China Trade War

The United States and Japan have been involved in trade frictions over a number of products including textiles, steel, automobiles, semi‐conductors, and agricultural products over the last 50 years. US–Japan trade frictions have taken basically two forms: (i) the United States attempting to restrict Japan's exports to the United States; and (ii) the United States attempting to increase its exports to Japan by “opening” the Japanese market. By putting pressure on Japan to adopt necessary measures, the United States sought to achieve two main objectives: (i) to reduce its trade deficit vis‐à‐vis Japan; and (ii) to protect and/or promote US industries. The United States failed to achieve the first objective, while some success was achieved for the second objective. The United States triggered a trade war against China with the objectives of: (i) reducing the bilateral trade deficit; and (ii) stopping unfair trade practices by Chinese firms such as violations of intellectual property rights and forced technology transfer. Based on the experiences from the US–Japan trade frictions, the United States may achieve some success for the second objective, but not for the first. The chances of achieving the second objective would increase if the United States cooperates with countries such as Japan and the European Union, which are faced with similar problems.     

An International Comparison of Employment Adjustment to Exchange Rate Fluctuations

This paper evaluates the response of employment to exchange rate shocks at the industry level for G-7 countries. Using an empirical framework that places little structure on the data, it is found that European industries, at least France and Germany, are much less influenced by exchange rate shocks and much slower to adjust to long-run steady states. The United States, Japan, Canada, the United Kingdom and Italy all appear to adjust more quickly. German and Japanese employment are quite insensitive to exchange rate fluctuations, consistent with previous research on output and markup responses to exchange rates.     

中美贸易失衡与人民币汇率“操纵”——基于汇率与贸易收支关系的实证研究

基于2002年1月至2011年12月的月度数据,运用自回归分布滞后(ARDL)模型,分别从总体和分行业的角度,探讨人民币兑美元实际汇率、汇率波动率与中美贸易收支之间的关系。研究结果表明,无论长期还是短期,人民币汇率水平和汇率波动率对中美两国之间总体和分行业贸易收支差额均不会产生显著影响。该结论意味着无论长期还是短期,中国政府都无法通过汇率操纵来达到扩大中美贸易收支顺差的目的。     

Exchange rate volatility and exports from East Asian countries to Japan and the USA

The purpose of this article is to investigate the impact of exchange rate volatility on exports in four East Asian countries (Hong Kong, South Korea, Singapore, and Thailand). Specifically, this article aims at determining whether the bilateral real exchange rate volatility between an East Asian country and its trading partner negatively affects the exports of the East Asian country. Considering the dominant roles of the USA and Japan as trading partners of those East Asian countries, this article focuses on the quarterly export volumes of East Asian countries to the US and Japan for the period from 1981 to 2004. Except for the case of Hong Kong's exports to Japan, cointegration tests and estimations of error correction models indicate exchange rate volatility has negative impacts on exports either in the short-run or in the long-run, or both. On the other hand, the real GDP of importing countries and depreciation of real bilateral exchange rates turn out, in general, to have positive effects. Of special interest is the finding that the impact of the exchange rate volatility does not show any stylized differences depending on whether the importing country is Japan or the USA, even though dollar invoicing dominates in East Asia.     

Macroeconomic effects of terms of trade fluctuations in commodity exporting advanced economies

The paper examines the impact of world commodity prices on national output and trade balances in Australia, Canada, New Zealand, and Norway, OECD economies that, unlike other advanced economies, are heavily dependent on commodity exports. Contrary to Dutch disease theory based on real exchange rate adjustment, it highlights the relative price effects of terms of trade (ToT) changes on gross domestic product and net exports with reference to the experience of this unique set of OECD countries. The econometric analysis verifies key predictions of this alternative perspective that ToT fluctuations should (i) have no significant short-run impact on GDP and that (ii) due to relative price effects a strong positive relationship between the ToT and net exports is unlikely.     

Debt and credit: Recent Canadian developments

In our examination of how recent developments (to 1988) in debt and credit markets have affected the Canadian economy, we compare the recent experience of borrower behavior in Canada with that in the United States, looking at debt-GDP ratios for various sectors and the corporate debt-equity ratio. In the late 1980s, the key differences between the two countries in the financial behavior of both the household and corporate sectors derive, we believe, from the sharper shock faced by Canadians in the early 1980s. Our examination of the relationship between credit growth and the growth of spending in the Canadian economy utilizes credit-indicator models developed at the Bank of Canada. We find that over the 1980–1987 period forecasts of the growth of real GDP and nominal GDP based on indicator models using real total household credit and nominal consumer credit, respectively, have narrowly outperformed the best bivariate monetary indicator models.     

Do German,Japanese, and U.S. export prices asymmetrically respond to exchange rate changes? Evidence from aggregate data

This article estimates the responses (elasticity coefficients) of the export price index to appreciation and depreciation of the nominal effective exchange rate using quarterly data (1973:1–1997:2) for Japan, Germany, and the United States. Cross-country comparisons of the elasticity magnitudes based on the statistically superior of the estimated models indicate that Japanese exporters, in the aggregate, have the highest tendency to dampen the effects of exchange rate fluctuations on the foreign currency export prices in both directions by adjusting their home currency prices. Intracountry comparisons provide some evidence of an asymmetric adjustment in export prices in the cases of Japan and Germany.     

Trade,Determinants, and Causality: A Case of Hong Kong's Exports to The United States

This paper examines recent development in Hong Kong's exports to the United States. It explains the trade flows by estimating five demand-equations for exports. Besides, vector autoregressions are fitted to test the causal relationship among exports, exchange rates and income. Our study suggests that a sustained high growth rate of Hong Kong's exports of principal commodities to the United States contribute to the chronical bilateral trade surplus for Hong Kong. Variations in income and exchange rates, the major determinants of Hong Kong's exports, “cause” exports to change as indicated in the causality test. [420]     

The Euro Effect on Eurozone Exports

In this article, we examine the impact of the real effective exchange rate for several countries in the Euro area over the period before and after the introduction of the euro. Based on ARDL modeling techniques, we estimate the long-run and short-run relationships between exports volumes and a number of key variables, namely Real Effective Exchange Rate, weighted GDP and Output Gap. This article is particularly oriented towards the study of long-term relationships between the exchange rate and global exports performance, on the one hand; and between exchange rates and intra-European exports performance, on the other. Two measures of exchange rate are considered: a global real exchange rate to investigate the impact of exchange rates on overall exports and an intra European real exchange rate calculated to detect its effect on intra-European trade. The study shows that there is a big difference between the impact of exchange rates on exports before and after the establishment of the European Monetary Union on the one hand, and between the impacts of exchange rates on intra-European global exports on the other hand.     

Exchange rate volatility and bilateral exports of Malaysia to Singapore,China, Japan,the USA and Korea

This study examines the impact of exchange rate volatility on bilateral exports of Malaysia to Singapore, China, Japan, the USA and Korea. Exchange rate volatility is estimated by an autoregressive conditional heteroscedasticity model. The Johansen cointegration method and the dynamic ordinary least squares estimator are used in the estimations. There is some evidence of exchange rate volatility to have significant impact on real total exports in the long run, but more evidence of exchange rate volatility is found to have significant impact on sub-categories of real total exports in the short run. The impact of exchange rate volatility differs across bilateral exports. The impact of exchange rate volatility on exports can be negative or positive. Generally, exchange rate volatility is not harmful to bilateral exports of Malaysia.