How sensitive is US-Sweden trade to the kronor-dollar rate: evidence from industry data
Mohsen Bahmani-Oskooee () and
Global Business and Economics Review, 2010, vol. 12, issue 4, 359-383
Previous research that investigated the response of Swedish trade balance to currency depreciation either used trade data between Sweden and rest of the world or between Sweden and her major trading partner. They did not find any long-run significant impact of depreciation on Swedish trade balance, especially with the USA. We wonder whether lack of any significant relation between bilateral trade balance between the two countries and the real kronor-dollar rate is due to aggregation bias. To this end, we disaggregate the trade data and use exports and imports data from 87 industries that trade between the two countries. Application of bounds testing approach to cointegration and error-correction modelling supports the notion that real depreciation of kronor-dollar rate has short-run effects on the trade flows of majority of the industries. Although, the short-run effects do not last into the long-run in most industries, 1% real depreciation of the dollar against kronor is predicted to improve the US trade balance with Sweden by 2%.
Keywords: USA; United States; Sweden; industry data; trade flows; cointegration; kronor-dollar rate; exchange rates; trade balance; currency depreciation. (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:12:y:2010:i:4:p:359-383
Access Statistics for this article
More articles in Global Business and Economics Review from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Carmel O'Grady (). This e-mail address is bad, please contact .