A Test for Hysteresis in International Trade |
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Authors: | Ricardo Denadai Vladimir K. Teles |
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Affiliation: | 1. Banco Santander, Madrid, Spain;2. Sao Paulo School of Economics—FGV, S?o Paulo, SP, Brazil |
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Abstract: | The article suggests a new test for strong hysteresis, that is, at the macro level, in international trade. The variables that capture the effects of hysteresis are based on a theoretical model with calibrations using a state–space model to determine the parameters for each point in time. These variables are then applied to a cointegration test with breaks, where it is possible to verify whether the hysteresis effect is essential in determining the long‐term equilibrium. |
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