Trade Balance Dynamics and Exchange Rates: In Search of the J-Curve Using a Structural Gravity Approach

Harald Badinger and Aurélien Fichet de Clairfontaine

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

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 2010Q1-2017Q2, 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.

Keywords: Exchange Rate Variations; Gravity; J-curve; Trade Balance (search for similar items in EconPapers)
JEL-codes: F12 F31 F32 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-int
Note: PDF Document
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://epub.wu.ac.at/5971/1/wp256.pdf (application/pdf)

Related works:
Journal Article: Trade balance dynamics and exchange rates: In search of the J‐curve using a structural gravity approach (2019)
Working Paper: Trade Balance Dynamics and Exchange Rates: In Search of the J-Curve Using a Structural Gravity Approach (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwwuw:wuwp256

Access Statistics for this paper

More papers in Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics Welthandelsplatz 1, 1020 Vienna, Austria.
Bibliographic data for series maintained by Department of Economics ().