International Evidence on the Determinants of Trade Dynamics
43 Pages Posted: 15 Feb 2006
Date Written: December 1997
This paper provides some new empirical perspectives on the relationship between international trade and macroeconomic fluctuations in industrial economies. First, a comprehensive set of stylized facts concerning fluctuations in trade variables and their determinants are presented. A measure of the quantitative importance of international trade for the propagation of domestic business cycles is then constructed, focusing on the role of external trade as a catalyst for cyclical recoveries. Finally, structural vector autoregression models are used to characterize the joint dynamics of output, exchange rates, and trade variables in response to different types of macroeconomic shocks.
Keywords: Trade balance, business cycles, exchange rates, OECD industrial economies
JEL Classification: F32, F41
Suggested Citation: Suggested Citation