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Is there an S-curve relationship between U.S. trade balance and terms of trade? An analysis across industries and countries

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  • Amit Ghosh

    (Illinois Wesleyan University)

Abstract

A key relationship in international economics is that between trade flows and exchange rates. This paper examines the empirical evidence of S-curve relationship between U.S. trade balance and terms of trade both at the aggregated and disaggregated level from 1989Q1 to 2010Q4. I find evidence of an S-curve for U.S. total trade in all goods and services with the rest of the world, as well as that for overall manufacturing and non-manufacturing categories. I further examine the top 20 industries at the SITC 3-digit level, and find evidence of an S-curve in 15 industries. Finally, the relationship is explored with the major trading partners in each of these twenty industries, also yielding positive evidence for several nations.

Suggested Citation

  • Amit Ghosh, 2012. "Is there an S-curve relationship between U.S. trade balance and terms of trade? An analysis across industries and countries," Economics Bulletin, AccessEcon, vol. 32(1), pages 325-337.
    • Handle: RePEc:ebl:ecbull:eb-12-00049
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    References listed on IDEAS

    as
    1. M Bahmani-Oskooee & A Ratha, 2009. "S-Curve Dynamics of Trade: Evidence from US-Canada Commodity Trade," Economic Issues Journal Articles, Economic Issues, vol. 14(1), pages 1-16, March.
    2. Bahmani-Oskooee, Mohsen & Ratha, Artarana, 2007. "Bilateral S-curve between Japan and her trading partners," Japan and the World Economy, Elsevier, vol. 19(4), pages 483-489, December.
    3. Mohsen Bahmani‐Oskooee & Artatrana Ratha, 2007. "The S‐curve Dynamics of US Bilateral Trade," Review of International Economics, Wiley Blackwell, vol. 15(2), pages 430-439, May.
    4. Bahmani-Oskooee, Mohsen & Ratha, Artatrana, 2010. "S-Curve dynamics of trade between U.S. and China," China Economic Review, Elsevier, vol. 21(2), pages 212-223, June.
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    Cited by:

    1. Dene T. Hurley & Nikolaos Papanikolaou, 2018. "An Investigation of China‐U.S. Bilateral Trade and Exchange Rate Changes Using the Autoregressive Distributed Lag Model," Economic Papers, The Economic Society of Australia, vol. 37(2), pages 162-179, June.

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    More about this item

    Keywords

    S-curve; trade balance; terms-of-trade; real exchange rates;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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