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Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture

Published online by Cambridge University Press:  15 September 2016

Jungho Baek ,
Won W. Koo  and
Kranti Mulik
Jungho Baek
Affiliation:
Center for Agricultural Policy and Trade Studies in the Department of Agribusiness and Applied Economics at North Dakota State University in Fargo, North Dakota
Won W. Koo
Affiliation:
Department of Agribusiness and Applied Economics and Director of the Center for Agricultural Policy and Trade Studies, also at North Dakota State University in Fargo
Kranti Mulik
Affiliation:
Global Insight Inc. in Eddystone, Pennsylvania
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Abstract

This study examines the dynamic effects of changes in exchange rates on bilateral trade of agricultural products between the United States and its 15 major trading partners. Special attention is paid to investigate whether or not the J-curve hypothesis holds for U.S. agricultural trade. For this purpose, an autoregressive distributed lag (ARDL) approach to cointegration is applied to quarterly time-series data from 1989 and 2007. Results show that the exchange rate plays a crucial role in determining the short- and long-run behavior of U.S. agricultural trade. However, we find little evidence of the J-curve phenomenon for U.S. agricultural products with the United States’ major trading partners.

Keywords

agricultural tradeautoregressive distributed lag approach to cointegrationbilateral tradeJ-curve effect
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 38 , Issue 2 , October 2009 , pp. 213 - 228
Copyright
Copyright © 2009 Northeastern Agricultural and Resource Economics Association 

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