, Volume 40, Issue 2, pp 237–257 | Cite as

Currency fluctuations and the French–U.S. trade balance: evidence from 118 industries

  • Mohsen Bahmani-OskooeeEmail author
  • Hanafiah Harvey
  • Scott W. Hegerty
Original Paper


The impact of currency depreciations on trade has inspired a large body of research. Recent studies have examined industry-level trade, often using cointegration analysis, finding that a significant fraction of industries respond positively to devaluations. Oftentimes, adjustment lags result in a “J curve” effect, where devaluations hurt the trade balance temporarily. This study examines the specific case of trade between the United States and France, but finds that these flows are less sensitive than has been shown for other country pairs. Only 30 of 118 industries see increased trade balances after a dollar depreciation, and virtually none follow any type of a “J curve.” Certain industry sectors are more sensitive than others, however. Examining the SITC classifications of those 30 industries, we find that many of them are clustered in the SITC 700 (Machinery and Transport Equipment) and 800 (Miscellaneous Manufactured Articles) categories. In particular, clothing and footwear, as well as electrical equipment, are particularly affected.


Industry trade Bounds testing United States France 

JEL Classification



  1. Bahmani-Oskooee M, Gelan A (2009) How stable is the demand for money in African Countries. J Econ Stud 36:216–235CrossRefGoogle Scholar
  2. Bahmani-Oskooee M, Hegerty SW (2007) Exchange rate volatility and trade flows: a review article. J Econ Stud 34:211–255CrossRefGoogle Scholar
  3. Bahmani-Oskooee M, Hegerty SW (2010) The J- and S-curves: a survey of the recent literature. J Econ Stud 37(6):580–596CrossRefGoogle Scholar
  4. Bahmani-Oskooee M, Hegerty SW (2011) The J-curve and NAFTA: evidence from commodity trade between the U.S. and Mexico. Appl Econ 43:1579–1593Google Scholar
  5. Bahmani-Oskooee M, Ratha A (2004) The J-curve: a literature review. Appl Econ 36(13):1377–1398CrossRefGoogle Scholar
  6. Bahmani-Oskooee M, Economidou C, Goswami GG (2005) How sensitive are Britain’s inpayments and outpayments to the value of the British pound. J Econ Stud 32:455–467CrossRefGoogle Scholar
  7. Bahmani-Oskooee M, Bolhassani M, Hegerty SW (2011) The effects of currency fluctuations and trade integration on industry trade between Canada and Mexico. Res Econ 64(4):212–223CrossRefGoogle Scholar
  8. Banerjee A, Dolado J, Mestre R (1998) Error-correction mechanism tests in a single equation framework. J Time Ser Anal 19:267–285CrossRefGoogle Scholar
  9. De Vita G, Kyaw KS (2008) Determinants of capital flows to developing countries: a structural VAR analysis. J Econ Stud 35:304–322CrossRefGoogle Scholar
  10. Halicioglu F (2007) The J-curve dynamics of turkish bilateral trade: a cointegration approach. J Econ Stud 34:103–119CrossRefGoogle Scholar
  11. Hsing Y, Sergi BS (2010) Test of the J-curve hypothesis between the U.S. and six western European countries and policy implications. J Transnatl Manag 15:176–185CrossRefGoogle Scholar
  12. Mohammadi H, Cak M, Cak D (2008) Wagner’s hypothesis: new evidence from Turkey using the bounds testing approach. J Econ Stud 35:94–106CrossRefGoogle Scholar
  13. Narayan PK (2005) The saving and investment nexus for China: evidence from cointegration tests. Appl Econ 37:1979–1990CrossRefGoogle Scholar
  14. Narayan PK, Narayan S, Prasad BC, Prasad A (2007) Export-led growth hypothesis: evidence from Papua New Guinea and Fiji. J Econ Stud 34:341–351CrossRefGoogle Scholar
  15. Payne JE (2008) Inflation and inflation uncertainty: evidence from the Caribbean Region. J Econ Stud 35:501–511CrossRefGoogle Scholar
  16. Pesaran MH, Shin Y, Smith RJ (2001) Bounds testing approaches to the analysis of level relationships. J Appl Econom 16(3):289–326CrossRefGoogle Scholar
  17. Rose AK, Yellen JL (1989) Is there a J-curve? J Monet Econom 24:53–68CrossRefGoogle Scholar
  18. Tang TC (2007) Money demand function for southeast Asian countries: an empirical view from expenditure components. J Econ Stud 34:476–496CrossRefGoogle Scholar
  19. Wong KN, Tang TC (2008) The effects of exchange rate variability on Malaysia’s disaggregated electrical exports. J Econ Stud 35:154–169CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  • Mohsen Bahmani-Oskooee
    • 1
    Email author
  • Hanafiah Harvey
    • 2
  • Scott W. Hegerty
    • 3
  1. 1.Center for Research on International EconomicsUniversity of Wisconsin-MilwaukeeMilwaukeeUSA
  2. 2.Department of EconomicsPenn State UniversityMont AltoUSA
  3. 3.Department of EconomicsNortheastern Illinois UniversityChicagoUSA

Personalised recommendations