Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5055167 | Economic Modelling | 2010 | 12 Pages |
Abstract
The United States economy suffers from persistent trade deficits, arising from the so-called 'global external imbalance'. Can the depreciation of the US dollar improve this phenomenon? This study for the first time applies the heterogeneous panel cointegration method to examine the long-run relationship between the real exchange rate and bilateral trade balance of the U.S. and her 97 trading partners for the period 1973-2006. Using new annual data, the empirical results indicate that the devaluation of the US dollar deteriorates her bilateral trade balance with 13 trading partners, but improves it with 37 trading partners, especially for China. In the panel cointegrated framework, a long-run negative relationship between the real exchange rate and the bilateral trade balance exists for the U.S.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Yi-Bin Chiu, Chien-Chiang Lee, Chia-Hung Sun,