Seasonal Fluctuations and International Trade

Mitsuhiro Kaneda and Gil Mehrez
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Mitsuhiro Kaneda: Georgetown University
Gil Mehrez: Georgetown University

International Trade from EconWPA

Abstract: This paper argues that seasonal fluctuations in international trade are large and have non-trivial effects on a country's resource allocation, production, and welfare. Using U.S. quarterly data, we find fluctuations of as much as 43% and 15% for apparel imports and exports respectively, and 7% and 12% for aggregate imports and exports respectively. In addition, we observe that seasonal fluctuations of aggregate exports have decreased substantially over time. We formulate a general equilibrium model to examine the link between changes in the size of seasonal fluctuations and the levels and variances of employment, output, and consumption. One result is that if price fluctuations increase under free trade, the traded good sector shrinks and the non- traded good sector expands. Increased trade volume can decrease fluctuations in domestic production of either good. This is verified in the data of U.S. apparel trade and production: we find that doubling of trade volume is associated with a 40% decrease in fluctuations in production.

Keywords: Seasonal Fluctuations; International Trade (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 E39 (search for similar items in EconPapers)
Date: 1998-09-25
Note: Type of Document - Microsoft Word; prepared on IBM PC; to print on HP; pages: 29 ; figures: included on graph1.GIF graph2.GIF graph3.GIF graph4.GIF graph5.GIF graph6.gif graph7.gif
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