Stephen E. Haynes

U.S.-Japanese bilateral trade and the yen-dollar exchange rate: an empirical analysis

The United States has recently experienced unprecedented balance of trade deficits. The merchandise trade deficit reached an all-time high of over

Impact of the Terms of Trade on the U.S. Trade Balance: A Reexamination

61 billion in 1983, and for 1984 was

An Integrated Test for Electoral Cycles in the U.S. Economy

108 billion. Japan is often singled out as the major contributor to this deficit. In 1984, roughly one-third of the U.S. merchandise trade deficit and over one-half of the U.S. manufacturing trade deficit was with Japan. Moreover, since shifts in trade balances are widely regarded as a function of changes in exchange rates, there has been a tendency to focus on the general depreciation of the yen in terms of the dollar which began in 1978 in explaining the U.S. trade deficit. This paper explores empirically the response of the U.S.-Japanese trade balance in manufacturing to movements in the yen-dollar rate. The analysis, based on both structural and reduced form approaches, provides a test of the conventional view that the weak yen has been a major factor explaining the Japanese penetration into the U.S. manufacturing sector, while Japanese protectionism has effectively insulated Japans markets from U.S. competition. Our analysis does not support this view. We find U.S. imports from Japan essentially insensitive to exchange rate movements, but U.S. exports to Japan highly exchange rate elastic. Since U.S. manufacturing imports from Japan dominate corresponding exports (

Electoral and partisan cycles between US economic performance and presidential popularity

58 billion to

A Neglected Method of Separating Demand and Supply in Time Series Regression

8 billion in 1984), we conclude that even a sustained appreciation of the yen in terms of the dollar is unlikely to reduce significantly the U.S. manufacturing trade deficit. In section II of this paper we specify structural and reduced-form models explaining U.S. bilateral manufacturing trade with Japan. In section III we present and evaluate struc-

Identification of Interest Rates and International Capital Flows

The right conclusion could be that there is a strong connection between the spectral components with specified periods. A possible economic interpretation could identify a strong long-term (in the sense of the specified periods) connection between both series. But that would still not allow us to say anything concerning the size and direction of the time delay between the two series. For such an analysis we would have to, at least, consider the phase angles between the components. Because of the ambivalent meaning of the phase angle (in relation to the direction and number of periods) the final answer could come only from the time domain analysis. However, the fact that only spectral components with longer periods, i.e., smaller frequencies, show coherency suggests something else: In order to influence the balance of trade the changes in the terms of trade should be durable enough. Mathematical formalization of this concept of durability would therefore be helpful. I would propose that further research be done in this respect.

The subtle danger of symmetry restrictions in time series regressions with application to fertility models.

This paper offers the first integrated test of the electoral model of business cycles. The test begins with unrestricted estimates of presidential electoral patterns in U.S. economic outcomes (real GNP, unemployment, and inflation) and policies (money growth and the adjusted budget surplus). These estimates are then used to determine whether the estimated electoral patterns in macropolicy yield predicted electoral patterns for macro outcomes that are consistent with estimates of both actual electoral patterns in outcomes and voting behavior. The results indicate that four-year electoral cycles in macroeconomic outcomes and policies are strongly significant for the United States for the period 1951I to 1986II. Copyright 1989 by MIT Press.

Cross-price effects in demand between exports and imports

Empirical voting/popularity research examines parameters that relate economic performance to voting and popularity, not the interaction of these parameters with movements in economic performance, which is what actually influences voting and popularity. This paper examines that interaction for the USA from 1953:1–1990:4 by decomposing the response of popularity to economic performance by both political party and the quarter of the electoral term. Averaged over the electoral term, economic performance increases the popularity of Democrats but decreases it for Republicans, whereas near the election the opposite occurs. Overall, the results appear consitent with a mix of partisan and electoral influences, so that no single approach seems fully adequate.

The response of fertility to the expectation of death: Implications for the demographic transition

This article argues that in many markets, quantity is demand determined in the short run but price is supply determined, and that the dynamic restrictions between price and quantity implied by the model have been widely neglected in empirical research. Two examples illustrate our point—the demand and supply relationships between inflation and unemployment and between the terms of trade and the trade balance. In both, specifying quantity as a function of lagged prices in demand and price as a function of lagged quantities in supply (rather than concentrating on exogenous shift determinants) is sufficient to separate demand and supply.

International capital movements: A synthesis of alternative models

The conventional paradigm that capital movements respond to differences in interest rates between countries and simultaneously reduce interest-rate differentials has been difficult to demonstrate empirically. This paper argues that such a demonstrati on may be feasible if a simultaneous model is specified that describe s the dynamics of adjustment and if a data interval is chosen that re veals the dynamics. Examination of U.S. and Canadian data from the 19 60s supports the argument-with monthly observations, that paradigm is strongly supported; with quarterly observations, capital flows and i nterest rates are not significantly related. Copyright 1988 by MIT Press.