Incomplete Exchange Rate Pass-through and Hysteresis in Trade
Author: Jukka Vesala
Publisher:
Published: 1992
Total Pages: 86
ISBN-13:
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Author: Jukka Vesala
Publisher:
Published: 1992
Total Pages: 86
ISBN-13:
DOWNLOAD EBOOKAuthor: Giorgia Giovannetti
Publisher: International Monetary Fund
Published: 1995-05-01
Total Pages: 20
ISBN-13: 145184719X
DOWNLOAD EBOOKThis paper presents an empirical examination of the importance of hysteresis in international trade. An econometric model of export determination is developed where the presence of sunk costs causes discontinuous behavior and hysteresis so that individual exporters’ decision to stay in or out of the market depends on the current value of the exchange rate as well as its past history. The aggregate level of exports is then determined by the proportion of exporters that stay in the market. The resulting non-linear model is estimated using data on manufacturing exports for the United States, Germany, and Japan. The paper finds strong evidence in favor of the presence of pricing-to-market and hysteresis only in the case of Japanese exports.
Author: C. Fred Bergsten
Publisher: Peterson Institute
Published: 2003
Total Pages: 334
ISBN-13: 9780881323511
DOWNLOAD EBOOKThis report provides alternative views of how large a dollar depreciation would be needed to restore a sustainable position; analyzes the impact of currency misalignments on each of the three major economies; and discusses the role of exchange market intervention in addressing the issues.
Author: Richard Pomfret
Publisher: World Scientific Publishing Company
Published: 2016-02-04
Total Pages: 321
ISBN-13: 9814725099
DOWNLOAD EBOOKInternational Trade: Theory, Evidence and Policy provides an integrated non-mathematical account of trade theory and policy that can be read straight through. The footnotes provide caveats, extensions and entry points, or further reading.This book is divided into three parts. The first part focuses on the core theoretical analysis of international trade that has evolved over a quarter-millennium. The second part reviews recent empirical research in global value chains, trade costs, and heterogeneous firms, particularly from analysing large datasets of individual firms' characteristics and of trade flows disaggregated to very finely detailed levels. The third section of the book analyzes trade policies and discusses current policy debates.This edition is based on Pomfret's Lecture Notes on International Trade Theory and Policy, first published in 2008. The content has been extensively updated and revised to stand as a new volume.
Author: Ms.Valerie Cerra
Publisher: International Monetary Fund
Published: 2020-05-29
Total Pages: 50
ISBN-13: 1513536990
DOWNLOAD EBOOKTraditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Author: Richard E. Baldwin
Publisher:
Published: 1989
Total Pages: 52
ISBN-13:
DOWNLOAD EBOOKUsing the sticky price monetary model of exchange rate determination and the sunk cost model of trade hysteresis, we show that a sufficiently large policy misalignment can induce hysteresis in the trade balance and thereby alter the steady?state real exchange rate. Thus in our model exchange rate dynamics are path dependent, PPP need not hold and money need not be neutral even in the very long run. We present only positive analysis but conjecture that the results have strong welfare, policy, and econometric implications. Since hysteresis in our model can entail industrial dislocation and the scrappage of sunk assets, we suggest that these factors may constitute a welfare cost of large policy misalignments that have not been formally considered. On the policy side, one could sensibly argue against the dollar volatility of the 1980s without at the same time arguing for a return to a formal exchange rate regime (because 1980s-size swings may involve welfare costs that 1970s-size swings do not). Lastly, since the long-run exchange rate is path dependent, standard empirical tests of exchange rate models may be misspecified.
Author: Hossein Samiei
Publisher: International Monetary Fund
Published: 1994-11-01
Total Pages: 26
ISBN-13: 1451932685
DOWNLOAD EBOOKThe IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Author: Mark J. Roberts
Publisher: World Bank Publications
Published: 1999
Total Pages: 44
ISBN-13:
DOWNLOAD EBOOKMarch 1995 Exports respond unpredictably to a change in real exchange rates, suggests evidence from the 1980s. Recent theoretical work explains this as a consequence of the sunk costs associated with breaking into foreign markets. Sunk costs include the cost of packaging, upgrading product quality, establishing marketing channels, and accumulating information on demand sources. The authors use micro panel data to estimate a dynamic discrete-choice model of participation in export markets, a model derived from the Krugman-Baldwin sunk-cost hysteresis framework. Applying the model to data on manufacturing plants in Colombia (1981-89), they test for the presence of sunk entry costs and quantify the importance of those costs in explaining export patterns. The econometric results reject the hypothesis that sunk costs are zero. The results, which control for both observed and unobserved sources of plant heterogeneity, indicate that prior export market experience has a substantial effect on the probability of exporting, but its effect depreciates fairly quickly. The reentry costs of plants that have been out of the export market for a year are substantially lower than the costs of a first-time exporter. After a year out of the export market, however, the reentry costs are not significantly different from the entry costs. Plant characteristics are also associated with export behavior: large old plants owned by corporations are more likely to export than other plants. Variations in plant-level cost and demand conditions have much less effect on the profitability of exporting than variations in macroeconomic conditions and sunk costs do. It appears especially difficult to break into foreign markets during periods of world recession.
Author: Jeffrey A. Frankel
Publisher: University of Chicago Press
Published: 2007-12-01
Total Pages: 295
ISBN-13: 0226260224
DOWNLOAD EBOOKRegional economic arrangements such as free trade areas (FTAs), customs unions, and currency blocs, have become increasingly prevalent in the world economy. Both pervasive and controversial, regionalization has some economists optimistic about the opportunities it creates and others fearful that it may corrupt fragile efforts to encourage global free trade. Including both empirical and theoretical studies, this volume addresses several important questions: Why do countries adopt FTAs and other regional trading arrangements? To what extent have existing regional arrangements actually affected patterns of trade? What are the welfare effects of such arrangements? Several chapters explore the economic effects of regional arrangements on patterns of trade, either on price differentials or via the gravity model on bilateral trade flows. In addition, this book examines the theoretical foundation of the gravity model. Making extensive use of the gravity model of bilateral trade, several chapters explore the economic effects of regional arrangements. In addition, this book examines the theoretical foundation of the gravity model.
Author: R. J. Barry Jones
Publisher: Taylor & Francis
Published: 2001
Total Pages: 636
ISBN-13: 9780415243520
DOWNLOAD EBOOKThis important new work is the first comprehensive reference to the rapidly developing field of international political economy [IPE]. Featuring over 1200 A-Z entries, the coverage encompasses the full range of issues, concepts, and institutions associated with IPE in its various forms. Comprehensively cross-referenced and indexed, each entry provides suggestions for further reading along with guides to more specialized sources. Selected entries include: * African Development Bank * benign neglect * Black Monday * casino capitalism * debt management * efficiency * floating exchange rates * General Agreement on Tariffs and Trade [GATT] *information society/economy * Organization of Petroleum-Exporting Countries [OPEC] * Microsoft * multinational corporations, definitions * NATO * patents * rent-seeking * Schellin, Thomas *tax havens * trusts * Value-Added Tax [VAT] * zero-sum games * and many more.