THE RELATIONSHIP BETWEEN US ANTI-DUMPING ENFORCEMENT AND EXCHANGE RATE MOVEMENTS REVISITED

Chia-Ching Lin () and Kun-Ming Chen ()
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Chia-Ching Lin: Department of International Trade, National Taichung University of Sciences and Technology, No. 193, Section 1, San Min Road, Taichung, Taiwan
Kun-Ming Chen: Department of International Business, National Chengchi University, No. 64, Zhi-nan Road, Section 2, Wenshan District, Taipei, Taiwan

Global Journal of Economics (GJE), 2013, vol. 02, issue 01, 1-23

Abstract: This paper develops a real options model of export with imperfect exchange rate pass-through to investigate the relationship between exchange rate movements and dumping activity. It is found that exchange rate level as well as its trend and volatility have an asymmetric effect on dumping occurrence, which depends on the long-run level of exchange rate. Specifically, when the value of an importing country's currency is low, the appreciation or expected appreciation will cause the dumping activity to rise, whereas when the currency value is high, this relationship might be reversed. Similarly, while the magnitude of exchange rate pass-through and dumping occurrence are positively related when the currency value of an importing country is high enough, they might become negatively related when the currency value is low enough. Furthermore, the exchange rate volatility and dumping occurrence will be positively related only if the value of an importing country's currency is extremely low or extremely high. Industry-level data on anti-dumping (AD) filings of the US covering the period 1980–2006 is used to test the validity of our theoretical model. Our empirical results are generally consistent with the prediction of our theory.

Keywords: Dumping; exchange rate pass-through; real options; JEL Classifications: F13; JEL Classifications: F31; JEL Classifications: G13 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1142/S225136121350002X

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