JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. This content downloaded from 128.235.251.160 on Tue
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.Abstract. Delayed reactions to exchange rate changes in trade on current account balances are known to exist in both the United States and Canada. A model has been constructed to estimate relative price effects for trade with major partners in order to determine the quantitative magnitudes and relevant time delays for both countries' adjustments in trade accounts. There is a distinct tendency for balances to worsen when exchange depreciation first occurs and then to improve. After several quarters have passed, there is also a tendency for the balances to worsen again. The U.S. and Canadian time profiles of adjustment are found to be similar.
Calibration des courbes en J: Canada et Etats-Unis. On sait qu'il existe des reactions avec delais des balances au compte courant quand il y a changements dans les taux de change tant aux Etats-Unis qu'au Canada. Les auteurs construisent un modele pour calibrer les effets des prix relatifs sur le commerce entre partenaires importants en vue de determiner la taille et les delais pertinents dans les ajustements des balances commercialesdes deux pays. On note une tendance nette a la deterioration des balances commerciales au moment de la d6preciation dans le taux de change; ensuite, elles s'am6liorent. Apres plusieurs trimestres, il y a de nouveau tendance pour les balances commerciales 'a se deteriorer. Il semble que les profils temporels des ajustements au Canada et aux Etats-Unis sont semblables.
MOTIVATIONConventional wisdom states that export and import propensities react to changes in relative prices with very long time lags. Some economists put the total span of distributed lags at five years or more. That may be an extreme position, but the time shape of reaction patterns certainly extends more than one or two years in the past. There are good reasons why the time lags are so long in international commerce; for We are thankful to two anonymous referees for their useful and constructive comments. Assistance from Hatem Ayyad and Wael Ayyad is gratefully acknowledged.
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