The World Trade Model: Merchandise Trade

Deppler, Michael C.; Ripley, Duncan M.

doi:10.2307/3866659

Cited by 60 publications

(30 citation statements)

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“…However, this demand-side interpretation still requires the presence of sunk costs and an initial e overvaluation in order to trigger entry. 576 BOB ANDERTON foreign firm in an imperfectly competitive market as in Mastropasqua and Vona (1989), Deppler and Ripley (1978) and Spencer (1984). Under certain assumptions the long-run values of i1 and i2 will sum to one.…”

Section: Import Pricesmentioning

confidence: 99%

UK Trade Performance and the Role of Product Quality, Innovation and Hysteresis: Some Preliminary Results

Anderton

1999

Scottish J Political Eco

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This paper seeks to explain the apparent contradiction in the UK's manufacturing trade performance over the past two decades: on the one hand, the early 1980s witnessed a substantial contraction in manufacturing employment along with a considerable surge in imports and decline in UK exports; on the other hand, UK trade performance, particularly exports, seems to have improved in the second half of the 1980s and early 1990s. The paper shows that the substantial, but temporary, appreciation of sterling in the early 1980s caused permanent damage to both the UK's trade performance and industrial base; and that the UK's relative investment performance, via its hypothesised impact on product quality, helps to explain the subsequent improvement in UK trade performance since the mid-1980s. I INTRODUCTIONThis paper seeks to explain the apparent contradiction in the UK's manufacturing trade performance over the past two decades: on the one hand, the early 1980s witnessed a substantial contraction in manufacturing employment along with a considerable surge in imports and decline in UK exports; on the other hand, UK trade performance, particularly exports, seems to have improved in the second half of the 1980s and early 1990s. The paper investigates whether the substantial, but temporary, appreciation of sterling in the early 1980s had a permanent impact on the UK's trade performance; and whether changes in the relative quality of UK products helps to explain the subsequent improvement in UK trade performance since the mid-1980s. This paper therefore has two major objectives. The first objective is to use the framework of endogenous growth theory to evaluate the relationship between innovation, product variety, product quality and UK trade performance. The paper experiments with several different proxy variables for product quality: patents, R&D expenditure and investment. 1 The second objective is to investigate whether UK trade relationships exhibit hysteresis and to ascertain 570 1 Although our measures of R&D, etc, may capture innovation, product quality or variety, we will later use the term`product quality' to refer to all of these possible effects. the extent to which trade in particular commodities is subject to hysteresis. 2 Within the framework of hysteresis, it is theoretically possible for trade volumes to respond quite differently to large fluctuations in exchange rates in comparison to small fluctuations. However, Orcutt (1950) develops an alternative theory based on switching costs which predicts a similar outcome. Any such effect may be particularly relevant to UK trade volumes given the large temporary appreciation of sterling in the late 1970s and early 1980s. We attempt to capture any UK hysteresis effects by: (a) testing whether the competitiveness elasticities of trade volumes vary in response to the magnitude of any change in the exchange rate, and (b) testing whether the profit margins embodied in UK import prices reacted symmetrically to the large temporary sterling appreciation in the early 1980s.We ...

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Section: Import Pricesmentioning

confidence: 99%

UK Trade Performance and the Role of Product Quality, Innovation and Hysteresis: Some Preliminary Results

Anderton

1999

Scottish J Political Eco

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“…5 The import and export volume equations that are used in this paper correspond fairly closely to those of the Fund's World Trade Model (Deppler and Ripley (1978)) and follow the approach suggested by Armington (1969). No time series have been collected on U. S. manufacturing exports from the parent company to its overseas affiliates and on total imports by the affiliates in each of the industrial countries.…”

Section: A Simple Model Of Conventional and Intrafirmmentioning

confidence: 93%

International Trade of Multinational Corporations and Its Responsiveness to Changes in Aggregate Demand and Relative Prices (Les echanges internationaux des societes multinationales et leur sensibilite aux variations de la demande globale et des prix relatifs) (El comercio internacional de las empresas multinacionales y su sensibilidad ante las variaciones de la demanda global y los precios relativos)

Goldsbrough

1981

Staff Papers - International Monetary Fund

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“…(The choice of data is discussed in more detaii below.) This is the standard formulation of export price equations in the literature, and an interesting theoretical rationale is provided by Deppler and Ripley (1978). They show that (1) can be regarded ; 1 9 a reduced form price equation for a profit-maximising firm which is subject to (a) diminishing returns to scale because capital is fixed in the short run; (b) perfect competition in the markets for the variable factors of production; and (c) less than perfect competition in the market €or the firm's output.…”

Section: Uv = F(pw Pd U )mentioning

confidence: 99%

Manufactured Export Prices in the United Kingdom and the “Law of One Price”*

Ormerod

1980

The Manchester School

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The World Trade Model: Merchandise Trade

Cited by 60 publications

References 0 publications

UK Trade Performance and the Role of Product Quality, Innovation and Hysteresis: Some Preliminary Results

UK Trade Performance and the Role of Product Quality, Innovation and Hysteresis: Some Preliminary Results

Manufactured Export Prices in the United Kingdom and the “Law of One Price”*

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