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Discussion Paper Details

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Title: Hysteresis in Exports

Author(s): Giorgia Giovannetti and Hossein Samiei

Publication Date: February 1996

Keyword(s): Aggregation, Hysteresis and Pass-through

Programme Area(s): International Trade and Regional Economics

Abstract: This paper presents an empirical examination of the importance of hysteresis in international trade. An econometric model of export determination is developed where the presence of sunk costs causes discontinuous behaviour and hysteresis so that an individual exporter?s decision to stay in or out of the market depends on the current value of the exchange rate as well as its past history. The aggregate level of exports is then determined by the proportion of exporters that stay in the market. The resulting non-linear model is estimated using data on manufacturing exports for Germany, Japan and the United States. The paper finds strong evidence in favour of the presence of pricing-to-market and hysteresis only in the case of Japanese exports.

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Bibliographic Reference

Giovannetti, G and Samiei, H. 1996. 'Hysteresis in Exports'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1352