Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined

Chinn, Menzie David

doi:10.2139/ssrn.346280

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Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined

UC Santa Cruz Economics Working Paper No. 525; Santa Cruz Center for International Economics Working Paper No. 02-17

37 Pages Posted: 24 Jan 2003

See all articles by Menzie David Chinn

Menzie David Chinn

University of Wisconsin, Madison - Robert M. La Follette School of Public Affairs and Department of Economics; National Bureau of Economic Research (NBER)

There are 3 versions of this paper

Date Written: July 2002

Abstract

This paper examines the stability of import and export demand functions for the United States over the 1975q1-2001q2. Using the Johansen maximum likelihood approach, an export demand function is readily identified. In contrast, there appears to be a structural break in the import demand function in 1995; specifications incorporating this break pass tests for cointegration, although the price elasticity is not statistically significant. Only when excluding computers and parts from the import series is a stable import demand function detected. The resulting point estimates do not exhibit the income asymmetry typically found in other studies of aggregate U.S. trade flows.

Keywords: imports, exports, elasticities, competitiveness, unit labor costs

JEL Classification: F31, F41

Suggested Citation: Suggested Citation

Chinn, Menzie David, Doomed to Deficits? Aggregate U.S. Trade Flows Re-Examined (July 2002). UC Santa Cruz Economics Working Paper No. 525; Santa Cruz Center for International Economics Working Paper No. 02-17, Available at SSRN: https://ssrn.com/abstract=346280 or http://dx.doi.org/10.2139/ssrn.346280