Thomas C. Lowinger

Nominal effective exchange rate and trade balance adjustment in South Asia countries

Abstract In this paper we examine the short-term and long-term determinants of trade balances of five South Asian countries, using quarterly data from 1985 to 1998. The paper confirms the existence of both short run and long run relationship between nominal effective exchange rates (NEER) and trade balances. This paper highlights the differences in the duration and the extent of the J-curve phenomena. Several plausible explanations consistent with our findings are offered.

An empirical test of purchasing power parity in selected developing countries: a panel data approach

Abstract This paper examines the empirical validity of Purchasing Power Parity (PPP) for certain large developing economies by using a panel unit root methodology. The test results show that a long run real exchange rate depreciation trend exists in certain developing countries. Without considering this depreciation trend, it is hard to verify the stationarity and to explain the existence of the extremely long half-lives of the real exchange rates. When a linear time trend is included in the tests, the results tend to support the stationarity of the underlying real exchange rate processes, and the half-lives are significantly shorter and their range can be explained by transitory disturbances.

OPEC in world financial markets: Oil prices and interest rates

Abstract This article examines the relationship between the real rate of interest in world financial markets and the price of oil. If OPEC cannot be viewed as a ‘small’ participant in world financial markets, and should its savings and portfolio behavior differ from that of the rest of the world, then wealth shifts to or from OPEC would affect world interest rates. Subsequently, this paper examines the magnitude of oil price changes required to elicit a significant interest rate change. Our empirical results shed light on OPECs behavior, which at times may differ from a pure profit maximizing cartel. The short-run price elasticity of the world demand for oil is -0.04 and the long-run elasticity is -0.10. OPEC itself, as expected, faces higher elasticities of -0.08 and -0.36, respectively. The demand elasticity of oil with respect to ‘world’ GNP is 0.8. A major objective of this paper has been to determine the effect of changes in oil prices on world interest rates, and vice versa. Our results imply that only very large oil price increases will have a significant impact on world interest rates. However, oil prices show a non-negligible sensitivity to changes in world interest rates.

Foreign Access to the Japanese Market: Structural and Economy-Wide Factors

This article explores the effect of changes in prices, income, and nontariff barriers on Japanese imports before and during the period of yen appreciation. Empirical findings support the contention that around the mid-1980s there was an apparent change in the responsiveness of manufactured imports to changes in GNP, as well as changes in nontariff barriers.

Empirical analysis and policy implications of the patterns and structure of japanese direct investment in the united states

Japans rapid transformation into a mature industrial economy and its growing role in the international economy have generated a great deal of interest among analysts and policymakers, particularly in terms of Japans trade and investment relations with the United States. This article provides an empirical analysis and policy implications of the Japanese direct investment in the manufacturing sector in the United States. We find that both industrial organization and the cost of capital considerations have been the proximate causes for the surge in such investments.

Import substitution, export promotion and the structure of Brazil's protection

Following a brief introduction the second section of this paper analyzes Brazils policy of import‐substituting industrialization (ISI), as it relates to a number of variables suggested by economic theory. The third part investigates the inter‐industry structure of Brazils protection as it relates to the countrys comparative advantage in manufactured goods. Finally, the concluding section takes up certain policy implications suggested by the previous analysis.