Is there an S-curve relationship between U.S. trade balance and terms of trade? An analysis across industries and countries

Amit Ghosh ()
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Amit Ghosh: Illinois Wesleyan University

Economics Bulletin, 2012, vol. 32, issue 1, 325-337

Abstract: A key relationship in international economics is that between trade flows and exchange rates. This paper examines the empirical evidence of S-curve relationship between U.S. trade balance and terms of trade both at the aggregated and disaggregated level from 1989Q1 to 2010Q4. I find evidence of an S-curve for U.S. total trade in all goods and services with the rest of the world, as well as that for overall manufacturing and non-manufacturing categories. I further examine the top 20 industries at the SITC 3-digit level, and find evidence of an S-curve in 15 industries. Finally, the relationship is explored with the major trading partners in each of these twenty industries, also yielding positive evidence for several nations.

Keywords: S-curve; trade balance; terms-of-trade; real exchange rates (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2012-01-23
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Citations: View citations in EconPapers (1)

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