Economics at your fingertips  

Impulse response analysis and Orcutt’s hypothesis in trade

Mohsen Bahmani-Oskooee () and Esmaeil Ebadi ()

Empirica, 2015, vol. 42, issue 3, 673-683

Abstract: How fast trade flows respond to exchange rate changes versus relative price changes has its own literature in international economics. Indeed, Orcutt (Rev Econ Stat 32:117–132, 1950 ) conjectures that they respond faster to exchange rate changes than to changes in relative prices. Previous studies tested the hypothesis by imposing lag structure on both the exchange rate and relative prices and judged Orcutt’s conjecture by identifying significant lag lengths. In this paper, we rely upon impulse response analysis as an alternative method to test the hypothesis. We find very limited number of cases in which impulse response of trade flows to changes in the exchange rate dies out sooner than the same response to changes in relative prices. Copyright Springer Science+Business Media New York 2015

Keywords: Orcutt’s hypothesis; Industrial countries; Impulse response; Trade flows; F31 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
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:

Ordering information: This journal article can be ordered from
http://www.springer. ... ration/journal/10663

Access Statistics for this article

Empirica is currently edited by Fritz Breuss and Fritz Breuss

More articles in Empirica from Springer, Austrian Institute for Economic Research, Austrian Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-10-08
Handle: RePEc:kap:empiri:v:42:y:2015:i:3:p:673-683