Regime changes and the impact of currency depreciations: The case of Spanish-US industry trade

Mohsen Bahmani-Oskooee, Hanafiah Harvey, Scott W. Hegerty

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

Over the past half century, Western Europe has been part of varying currency regimes. Yet, whether under Bretton Woods, the European Monetary System, or the Euro, exchange-rate fluctuations have had an influence on these countries' trade flows with the United States at the national and the industry level. This study looks at the case of Spain, examining the role of real exchange-rate fluctuations on trade with the United States for 74 industries. We find that the trade balances of only 40 industries are cointegrated with their macroeconomic determinants, but that 26 of these respond positively in the long run to a real depreciation. While industry characteristics do not seem to explain which industries are more likely to do this, we find that a relatively large share of industries in the Machinery sector see their trade balances improve after a depreciation.

Original languageEnglish (US)
Pages (from-to)21-37
Number of pages17
JournalEmpirica
Volume40
Issue number1
DOIs
StatePublished - Feb 2013

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Development

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