In this article, we conjecture that the speed with which trade flows adjust to exchange rate and relative price changes are faster during post-1990 as compared to pre-1990. We attribute this to the Internet revolution and technological advances that took place during the 1990s. Our hypothesis is supported in 10 out of 16 import and export demand models that are estimated for eight countries. When the models are estimated for the entire sample period, we try to update Orcutt's (1950) hypothesis that trade flows adjust to exchange rate changes faster than to changes in relative prices. Like previous studies, not much support is found for the later hypothesis and results are country specific.


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    Title :

    Have Technological Advances Reduced Response Time of Trade Flows to Changes in the Exchange Rate and Relative Prices?



    Published in:

    Publication date :

    2016




    Type of media :

    Article (Journal)


    Type of material :

    Print


    Language :

    English



    Classification :

    BKL:    83.72 Verkehrswirtschaft / 83.71 Handel
    Local classification FBW:    oek 3855