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Income Effects on the Trade Balance in the United States: Analysis by Sector

Published online by Cambridge University Press:  26 January 2015

Dragan Miljkovic  and
Rodney Paul
Dragan Miljkovic
Affiliation:
North Dakota State University
Rodney Paul
Affiliation:
St. Bonaventure University
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Abstract

This study examines the causes of the countercyclicality of the trade balance in the three major sectors of the U.S. economy: services, manufacturing, and agriculture. These results are compared with the results pertinent to the U.S. economy as a whole. At the macroscopic level, Sachs' hypothesis seems to explain the countercyclicality of the trade balance, while results are mixed across individual sectors. The services sector may be explained by Sachs’ hypothesis, while results for the manufacturing sector are more consistent with the real business cycle hypothesis. The results for the agricultural sector, however, cannot be explained by either hypothesis.

Keywords

decomposition of variancereal business cycletrade balanceF4E32
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 40 , Issue 3 , December 2008 , pp. 967 - 982
Copyright
Copyright © Southern Agricultural Economics Association 2008

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