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Empirica

, Volume 40, Issue 2, pp 287–324 | Cite as

Impact of exchange-rate variability on commodity trade between U.S. and Germany

  • Mohsen Bahmani-Oskooee
  • Masoomeh Hajilee
Original Paper

Abstract

Previous studies that looked at the impact of exchange rate volatility on trade flows used aggregate trade data between one country and rest of the world or between two countries. More recent studies, however, have expanded the literature by using a highly disaggregated commodity level data between two countries. In this paper we consider the sensitivity of 131 industries that trade between U.S. and Germany. We find that exports and imports of a majority of the industries react to the real dollar–euro volatility in the short run. The short-run effects, however, last into the long run only in almost 50 % of the industries. Among these industries, while almost all U.S. exporting industries are affected favorably by exchange rate volatility, a majority of the U.S. importing industries are affected adversely.

Keywords

Exchange rate volatility Industry data Germany United states Bounds testing 

JEL Classification

F31 

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Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  1. 1.The Center for Research on International Economics and Department of EconomicsThe University of Wisconsin–MilwaukeeMilwaukeeUSA
  2. 2.School of Business AdministrationUniversity of Houston–VictoriaVictoriaUSA

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