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Evidence on Orcutt's hypothesis using Turkish–US commodity trade

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  • Mohsen Bahmani-Oskooee
  • Nazif Durmaz

Abstract

Many of the studies that have tested the Orcutt's hypothesis in trade have used aggregate trade data between one country and rest of the world. Since these studies suffer from aggregation bias, three recent studies have employed data at commodity level and have found relatively more support for the hypothesis. In this paper we test the hypothesis using commodity level data from 54 industries that trade between Turkey and the US. We find support for the notion that trade flows respond to exchange rate changes faster than to relative price changes in one-third of the industries, supporting Orcutt's conjecture.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Nazif Durmaz, 2017. "Evidence on Orcutt's hypothesis using Turkish–US commodity trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 26(1), pages 25-44, January.
    • Handle: RePEc:taf:jitecd:v:26:y:2017:i:1:p:25-44
    DOI: 10.1080/09638199.2016.1201126
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