Consumer durables, permanent terms of trade shocks, and the recent US trade deficits

Article Abstract:

US trade deficits in the 1980s may have been caused by permanent declines in consumer durable import prices. Thus, a 12% permanent decline in such prices results in an 8-year average decline in the trade balance of 0.58% of GDP. Using an open economy real business cycle model, the drop in trade balance has also been found to be determined by wealth effects, which constitutes about 96% of the trade balance response rather than substitution effects.

Durable Goods GDP, Analysis, Prices and rates, Balance of trade, Durable goods

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International listings and risk

Article Abstract:

An analysis of volatility variations which are linked with stock exchange listings is presented. The analysis focuses on US stocks which are part of international exchanges. Forty firms are examined for their stocks' volatilities in the presence of exchange-listed options at listing period. It is shown that overseas exchange listings generate increases in predicted volatility. The results validate the noise trading hypothesis.

Evaluation, Stocks, Stock-exchange, Securities listing

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