Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5053694 | Economic Modelling | 2016 | 9 Pages |
Abstract
Will a higher savings rate improve a country's trade imbalance? Using data for 76 countries for the period 1975-2010, we examine the relationship between trade balance, savings rate, and real exchange rate. To address the potential non-linear effects of the savings rate, we use the panel smooth transition regression (PSTR) model with instrumental variables. Our results indicate that countries with a savings rate above the threshold of 14.8% can improve their trade balance by increasing the savings rate or depreciating their currency. Even though the sample is divided into two groups on the basis of income level, the empirical results vary little, suggesting that our findings are robust to the data separation.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Yi-Bin Chiu, Chia-Hung D. Sun,