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| Author: | Parsley, D. Wei, J. |
| Title: | Insignificant and inconsequental hysteresis: the case of U.S. bilaterial trade |
| Journal: | Review of Economics and Statistics
1993 : NOV, VOL. 75:4, p. 606-613 |
| Index terms: | USA BILATERAL TRADE ECONOMICS |
| Language: | eng |
| Abstract: | This paper casts doubt on the validity of the hysteresis hypothesis as an explanation of the persistent U.S. trade deficits in the 1980s. The authors propose two tests to investigate two different implications of the hypothesis. The first implication ic that cumulative changes in exchange rates, in addition to current exchange rate levels, are important determinants of trade flows. The second implication is that foreign exporting firms' perceptions of exchange rate volatility will affect their decisions to enter or exit the market. |
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