Income Effects on the Trade Balance in the United States: Analysis by Sector

Dragan Milijkovic and Rodney Joseph Paul ()

Journal of Agricultural and Applied Economics, 2008, vol. 40, issue 03

Abstract: This study examines the causes of the countercyclicality of the trade balance in the three major sectors of the U.S. economy: services, manufacturing, and agriculture. These results are compared with the results pertinent to the U.S. economy as a whole. At the macroscopic level, Sachs’ hypothesis seems to explain the countercyclicality of the trade balance, while results are mixed across individual sectors. The services sector may be explained by Sachs’ hypothesis, while results for the manufacturing sector are more consistent with the real business cycle hypothesis. The results for the agricultural sector, however, cannot be explained by either hypothesis.

Keywords: decomposition of variance; real business cycle; trade balance; Agribusiness; International Relations/Trade; F4; E32 (search for similar items in EconPapers)
Date: 2008
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Persistent link: http://EconPapers.repec.org/RePEc:ags:joaaec:47271

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