How Sensitive Are the U.S. Inpayments and Outpayments To Real Exchange Rate Changes: An Asymmetry Analysis

Document Type

Article

Publication Date

10-1-2019

Department

Political Science, International Development, and International Affairs

School

Social Science and Global Studies

Abstract

Previous studies that assessed the impact of exchange rate changes on a country’s inpayments and outpayments assumed that such effects are symmetric. The evidence from the literature reveals that import and export prices react to exchange rate changes in an asymmetric manner. This implies that export earnings and payments for imports should also react to exchange rate changes in an asymmetric manner. We demonstrate this by using Shin et al.’s (2014) nonlinear ARDL approach and inpayments and outpayments of the U.S. with her 15 trading partners. We find evidence of short-run as well as long-run asymmetric effects in more than half of the models, though the findings are found to be partner specific.

Publication Title

International Economics & Economic Policy

Volume

16

Issue

4

First Page

619

Last Page

647

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