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A note on the S-curve dynamics of commodity trade between Brazil and the United States

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  • Mohsen Bahmani-Oskooee
  • Dan Xi

Abstract

The S-curve hypothesis postulates that the correlation coefficient between the current exchange rate and past trade balance values may be negative. However, the correlation between the current exchange rate and future values of the trade balance may be positive. Previous research using aggregate trade flows between Brazil and rest of the world find weak support for the curve. When we disaggregate Brazil’s trade flows with the U.S. and investigate 95 industries that trade between the two countries, we find support for the S-curve in 51 industries. Small and large industries and durable and non-durable commodities are found to benefit from currency devaluation.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Dan Xi, 2015. "A note on the S-curve dynamics of commodity trade between Brazil and the United States," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(1), pages 79-94, May.
    • Handle: RePEc:ioe:cuadec:v:52:y:2015:i:1:p:79-94
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    References listed on IDEAS

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    More about this item

    Keywords

    S-curve; industry data; Brazil; United States;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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