Trade balance dynamics and exchange rates: in search of the J-curve using a structural gravity approach.

Badinger, Harald ORCID: https://orcid.org/0000-0002-7238-5136 and Fichet de Clairfontaine, Aurélien (2019) Trade balance dynamics and exchange rates: in search of the J-curve using a structural gravity approach. Review of International Economics, 27. pp. 1268-1293. ISSN 1467-9396

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Abstract

This paper uses a structural gravity approach, specifying currency movements as trade cost component to derive an empirical trade balance model, which incorporates multilateral resistance terms and accounts for the cross‐country variation in the exchange rate pass‐through into import and export prices. The model is estimated using quarterly bilateral trade flows between 47 countries over the period 2010Q1 to 2017Q2, disaggregated into 97 commodity groups. Our results support the existence of an "aggregate" J‐curve, pooled over commodity groups; at the same time they point to considerable heterogeneity in the trade balance dynamics across industries below the surface of aggregate data.

Item Type: Article
Classification Codes: JEL F12; F31; F32
Divisions: Departments > Volkswirtschaft > Internationale Wirtschaft
Forschungsinstitute > Europafragen
Version of the Document: Published
Depositing User: Gertraud Novotny
Date Deposited: 08 Apr 2020 08:46
Last Modified: 08 Apr 2020 08:46
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/95256/
URI: https://epub.wu.ac.at/id/eprint/7543

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