Testing purchasing power parity (PPP) in the black market has increased in recent years due to the apparent puzzle in the literature by which PPP is largely rejected in flexible exchange rate regimes. Many studies of PPP suffer from the problem of imposing symmetry and proportionality...

Several studies have tested the J-curve phenomenon for Australia using non-stationary aggregate trade data and have provided mixed results. They not only suffer from the 'aggregation bias problem' but also from the 'spurious regression problem'. To overcome these problems, in this paper we...

In theoretical literature, smuggling is considered as a factor contributing to the deviation of the PPP-based exchange rates from the equilibrium exchange rates with little empirical support. In this paper, we used panel data for 33 developing countries over the period 1982-1995 and used panel...

Since the Bretton Woods system of fixed exchange rates broke down in 1973, the resulting increase in exchange-rate variability has introduced uncertainty into trading relationships worldwide. Has this increased volatility had an effect on Japanese-U.S. trade? To answer this question, we apply...

Several test statistics like Akaike Information Criterion (AIC) or Schwarz Bayesian Criterion (SBC) are used to select the order of Vector Autoregressive Models (VAR) in Johansen's cointegration technique, but not the appropriate cointegrating vector in case of multiple vectors. In this note...

In an attempt to assess the impact of currency depreciation on the trade balance, recent studies are employing disaggregated trade data to avoid aggregation bias. However, since import and export prices are not available at disaggregated level, recent studies are using export and import values...

A few studies have provided empirical support for the fact that the demand for international reserves experienced structural instability in 1973 and 1979 due to a change in exchange rate system and oil price shocks. Thus, under the current managed float due to exchange rate and oil price...