Exchange-rate sensitivity of commodity trade flows: Does the choice of reporting country affect the empirical estimates?

Mohsen Bahmani-Oskooee, Scott Hegerty, Hanafiah Harvey

Research output: Contribution to journalArticle

Abstract

While the effects of currency fluctuations on trade have long been of interest to economic researchers, the most recent trend in the literature is to estimate commodity trade flows between pairs of countries. This raises an important question: Does it matter which country reports the data? This study investigates 96 industries that are reported both as exports by the United States and as imports by South Korea. Since export data are FOB and import data are CIF, the Korean imports are expectedly larger than the US exports. Correspondingly, our cointegration analysis produces drastically different results between specifications. Nonparametric analysis shows that the Korean imports are more sensitive to real exchange-rate fluctuations than US exports, signifying the importance of cost of insurance and freight, as well as the data's conversion into dollars.

Original languageEnglish (US)
Pages (from-to)1183-1213
Number of pages31
JournalJournal of International Trade and Economic Development
Volume22
Issue number8
DOIs
StatePublished - Dec 1 2013

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trade flow
exchange rate
commodity
import
Insurance
fluctuation
cointegration analysis
Specifications
real exchange rate
Economics
currency
South Korea
dollar
insurance
Costs
Industry
industry
trend
costs
economics

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Development
  • Aerospace Engineering

Cite this

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Exchange-rate sensitivity of commodity trade flows : Does the choice of reporting country affect the empirical estimates? / Bahmani-Oskooee, Mohsen; Hegerty, Scott; Harvey, Hanafiah.

In: Journal of International Trade and Economic Development, Vol. 22, No. 8, 01.12.2013, p. 1183-1213.

Research output: Contribution to journalArticle

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