Hysteresis in Exports

20 Pages Posted: 15 Feb 2006

See all articles by Giorgia Giovannetti

Giorgia Giovannetti

Università di Firenze

Hossein Samiei

International Monetary Fund (IMF)

Date Written: May 1995

Abstract

This paper presents an empirical examination of the importance of hysteresis in international trade. An econometric model of export determination is developed where the presence of sunk costs causes discontinuous behavior and hysteresis so that individual exporters` decision to stay in or out of the market depends on the current value of the exchange rate as well as its past history. The aggregate level of exports is then determined by the proportion of exporters that stay in the market. The resulting non-linear model is estimated using data on manufacturing exports for the United States, Germany, and Japan. The paper finds strong evidence in favor of the presence of pricing-to-market and hysteresis only in the case of Japanese exports.

JEL Classification: C510, F310

Suggested Citation

Giovannetti, Giorgia and Samiei, Hossein, Hysteresis in Exports (May 1995). IMF Working Paper No. 95/52, Available at SSRN: https://ssrn.com/abstract=883200

Giorgia Giovannetti (Contact Author)

Università di Firenze ( email )

Piazza di San Marco, 4
Florence, 50121
Italy

Hossein Samiei

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
(202) 623-6356 (Phone)

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