RELATIVE RESPONSIVENESS OF TRADE FLOWS TO A CHANGE IN PRICES AND EXCHANGE RATE IN DEVELOPING COUNTRIES
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In 1950 Orcutt conjectured that a country’s trade flows could respond to a change in exchange rate quicker than they do to a change in relative prices. Previous research that supported Orcutt’s hypothesis employed non-stationary data rendering the results to suffer from spurious regression problem. When we account for stationarity of the data by using cointegration and error-correction modeling, no strong evidence is found in support of the Orcutt’s hypothesis. The findings in this paper for developing countries are similar to those found for developed countries.
Abstract
In 1950 Orcutt conjectured that a country’s trade flows could respond to a change in exchange rate quicker than they do to a change in relative prices. Previous research that supported Orcutt’s hypothesis employed non-stationary data rendering the results to suffer from spurious regression problem. When we account for stationarity of the data by using cointegration and error-correction modeling, no strong evidence is found in support of the Orcutt’s hypothesis. The findings in this paper for developing countries are similar to those found for developed countries.
참고문헌 (18)
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