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Insignificant and Inconsequential Hysteresis: The Case of the U.S. Bilateral Trade / David C. Parsley, Shang-Jin Wei.
- Format:
- Book
- Author/Creator:
- Parsley, David C.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w4738.
- NBER working paper series no. w4738
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Insignificant and Inconsequential Hysteresis
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1994.
- Summary:
- This paper casts doubt on the validity of the hysteresis hypothesis as an explanation of the persistent U.S. trade deficits in the 1980s. We propose two tests to investigate two different implications of the hypothesis. The first implication is that cumulative changes in exchange rates, in addition to current exchange rate levels, are important determinants of trade flows. The second implication is that foreign exporting firms' perceptions of exchange rate volatility will affect their decisions to enter or exit the market. We find little support for either aspect of the hysteresis hypothesis.
- Notes:
- Print version record
- May 1994.
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