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Dynamic Effects of Exchange Rate on U.S. Trade Balance of Grain and Horticulture: Averaging or Pooling?
( Dae Heum Kwon ) , ( Won W. Koo )
UCI I410-ECN-0102-2012-350-002233616

This study investigates the effects of exchange rate on the trade balance of grain and horticulture products. To address methodological issue in traditional aggregation and recent disaggregation methods across countries, the mean group (MG) and pooled mean group (PMG) estimators are utilized. Results based on combination of pooling and averaging suggest that (i) the grain trade is more sensitive than the horticulture trade to the exchange rate movement in the long-run; and (ii) the J-curve phenomenon may exist in the grain trade, while such a possibility is very low in the horticulture trade.

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