Search

Brazil and USA are important trading partners. Brazil as a resource-rich country in Latin America and a vibrant emerging economy draws enormous US trade and investment interests. Inclusion in BRICS lifts Brazil as an emerging global economic force and BRICS as a group poses economic challenges to the developed world. The Brazil-US growing trade and fluctuating Real-Dollar exchange rate are a fascinating issue of empirical exploration. The principal objective of this paper is to study the dynamics between Brazil-US nominal trade balance and nominal Real-Dollar exchange rate. Monthly data are utilized from January 1999 through December 2013 since Brazil allowed floatation of Real beginning in January 1999. They are obtained from the Direction of Trade and International Financial Statistics, published by the IMF. The standard cointegration methodology is implemented. This is appropriate since macroeconomic and financial variables are very likely to be time-variant. The application of OLS on nonstationary variables would produce misleading inferences in presence of spurious correlation. Consequently, the efficient DF- GLS and NG-Perron tests for nonstationarity and their counterpart KPSS test for stationarity are applied. All of them confirm nonstationarity of both time series variables. Stationarity in both variables is restored on first-differencing of the level data depicting I(1) behavior. Consequently, the Johansen-Juselius procedure is implemented for cointegrating relationship. Both [[lambda].sub.max] and [[lambda].sub.trace] test statistics unveil no cointegration between nominal bilateral trade balance and exchange rate. In this backdrop, VAR model is estimated, as appropriate. The evidences on short-run bidirectional causal flows are strong with significant interactive feedback effects. In the case of reverse causality, the evidences are highly insignificant. The impulse response analysis depicts the existence of short-run bilateral J-curve that shows initial deterioration in trade balance for a while following exchange rate depreciation before improvement into positive territory. In this paper, the J-curve shows that currency depreciation by Brazil against the US dollar to improve its trade balance with the USA may work only in the short run. Progressive improvement in trade balance in the long run would, in fact, depend on prudent monetary and fiscal actions to enhance Brazil's global competitiveness through improvement in labor productivity and modern technology adoption. JEL Classifications: F10, F14, F15 Keywords: Unit Roots, Cointegration, Granger Causality, Exchange Rate, Trade Balance, INTRODUCTION Brazil is the largest economy in South America with richness in natural resources and 195 million consumers. In 2011, the Gross Domestic Product (GDP) of Brazil was $2.5 trillion [...]

This paper studies the long-run and short-run dynamics between emigrants' nominal inbound remittances in U.S. dollar term to Mexico and the Peso-Dollar nominal exchange rates. Relatively high frequency monthly data from January 1987 through December 2008 are employed. Given the comparatively short sample period, the monthly data partially compensate for implementation of standard cointegration methodology. Empirically, both variables are found nonstationary in levels with behavior in terms of DF-GLS, Ng-Perron, and KPSS tests. The changes in exchange rate exert more pronounced influences on the changes of remittances in the long run as compared to the converse. Significant short-run interactive net positive feedback effects between the variables are also evidenced. On a net basis, Mexico should pursue an exchange rate policy that would promote remittance inflows from the USA for potential net economic gains without much apprehension of the so called Dutch Disease. JEL Classifications: F22, F31 Keywords: Remittances, Exchange Rate, Cointegration, Causality, Feedbacks, INTRODUCTION International migration is an ancient phenomenon. It is the result of demand-supply mismatch and arbitrage in global labor markets. Movements across geographical and political boundaries have continued to grow [...]

This paper studies the dynamics of the Taka-U.S.Dollar exchange rate for Bangladesh by augmenting the Quantity Theory of Money. The standard cointegration methodology (Engle and Granger, 1987) is employed in addition to the ARDL (Autoregressive Distributed Lag) procedure. The ADF and KPSS tests reveal data nonstationarity, but with different orders of integration. As a result, the ARDL procedure is invoked following (Peseran et al., 2001) to search for cointegrating relationship among the variables. On the evidence of cointegration, the vector error- correction model (VECM) is estimated. The negative sign of the coefficient of the error-correction term and its statistical significance in terms of the associated t -value confirm unidirectional causal flow from broad money supply and real GDP to Taka-U.S.Dollar exchange rate and long-run convergence with short-run interactive feedback effects. Furthermore, impulse response analyses are performed for additional visual insights. JEL Classifications: E0, F3, F4 Keywords: Exchange Rate, Quantity Theory of Money, Cointegration., INTRODUCTION Bangladesh pursued relatively restricted trade and exchange rate policies to deal with the immediate post-independence depressing economic conditions during 1971-1975. Since 1976, a series of trade liberalizing policies and [...]

Multivariate analysis is done to examine the impact of foreign direct investments, exports and exchange rates on the economic development of Bangladesh.

The article focuses on the causality relation between the economic growth and the consumption of energy for the period between 1981 and 2010 in eight Asian countries including China, India, and Malaysia. For the analysis the authors apply Johansen-Juselius procedure, traditional unit root tests, and autoregressive distributed lag (ARDL) procedure. The relation between countries' gross domestic product (GDP) and the energy consumption is also commented on.

In this paper the author examines the effects of external migration on the nontraded sector of the labor-importing developing economy. It is found that devaluation by the labor-exporting country will reduce the pressure on excess demand for labor and reduce the price of nontraded goods. Increases in the migrant workers' consumption expenditures, the government expenditures on nontraded goods and the price of traded goods will increase the pressure on excess demand for labor and raise the price of nontraded goods. The effects of an increase in host country nominal wage, however, will remain ambiguous. The prime objective of this study is to investigate the effects of temporary external migration on the labor market and the market for nontraded goods in the labor-importing country. [ABSTRACT FROM AUTHOR]

Examines the issues of integration and causality in United States mortgage and T-bond markets, as it relates to economics. Methodology used in the examination; Results from the examination; Factors which attributed to the integration of financial markets; Provision of statistical information.