Currency depreciations and the U.S.-Italian trade balance: Industry-level estimates

Mohsen Bahmani-Oskooee, Hanafiah Harvey, Scott Hegerty

Research output: Contribution to journalArticle

3 Scopus citations

Abstract

As one of the indebted Southern European countries that have put pressure on the Euro in recent months, Italy would benefit from a reduction in its external trade deficit. One channel could be through a weakening of its currency-which would only work if the Euro depreciated against the currency of an outside importer, such as the U.S. dollar. This study examines the response of the trade balances of 106 individual industries to such depreciations, using annual data and applying cointegration analysis. We find that only 19 industries register a long-run improvement, with these concentrated in miscellaneous manufactures (SITC sector 8). Two major products in the automotive industry-petroleum and road motor vehicles, show evidence of a ". J-curve" effect.

Original languageEnglish (US)
Pages (from-to)215-225
Number of pages11
JournalResearch in Economics
Volume67
Issue number3
DOIs
StatePublished - Sep 1 2013

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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