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Scott W. Hegerty

Bio: Scott W. Hegerty is an academic researcher from Northeastern Illinois University. The author has contributed to research in topics: Volatility (finance) & Exchange rate. The author has an hindex of 17, co-authored 101 publications receiving 1481 citations. Previous affiliations of Scott W. Hegerty include Florida State University College of Arts and Sciences & Canisius College.


Papers
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Journal ArticleDOI
TL;DR: In this paper, the authors examined the vast empirical literature, up to 2005, to assess the main trends in modeling and estimating these trade flows at the aggregate, bilateral, and sectoral levels.
Abstract: Purpose – Since the last review article by McKenzie, the literature has experienced a surge in the number of empirical articles. These new contributions, coupled with those that were overlooked by McKenzie, set the stage for this review. Many of the recent studies have been empirical in nature and these deserve specific attention. Thus, this paper aims to survey and review all of the studies by paying attention to the attributes outlined in the text.Design/methodology/approach – This paper examines the vast empirical literature, up to 2005, to assess the main trends in modeling and estimating these trade flows at the aggregate, bilateral, and sectoral levels.Findings – The increase in exchange‐rate volatility since 1973 has had indeterminate effects on international export and import flows. Although it can be assumed that an increase in risk may lead to a reduction in economic activity, the theoretical literature provides justifications for positive or insignificant effects as well. Similar results have b...

330 citations

Journal ArticleDOI
TL;DR: In this article, the authors reviewed the literature on the J and S curves and proposed a method to test the validity of the J• and S-curves empirically, and showed that currency depreciation worsens the trade balance before improving it.
Abstract: Purpose – Since the introduction of the concepts of the J‐ and S‐curves, many researchers have tried to verify their validity empirically. This paper aims to review the related papers and to offer direction for future research.Design/methodology/approach – This is a review paper. As such, no method is employed here. Rather, the methodologies used by others to test the J‐ and S‐curves are explained and reviewed.Findings – No new findings are offered since this is a review paper.Practical implications – The J‐ and S‐curves show whether currency depreciation worsens the trade balance first before improving it. Since the majority of studies are country‐specific, policymakers could benefit by learning whether currency depreciation will be effective in improving the trade balance.Originality/value – This is a literature review paper and its originality is in terms of collecting the literature together and presenting it in one single paper.

170 citations

Journal ArticleDOI
TL;DR: The authors survey the literature that has tested the M•L condition, examining in particular whether previous studies' results are statistically significant, and conduct their own estimation of 29 countries' trade elasticities, over the past few decades.
Abstract: Purpose – The Marshall‐Lerner (M‐L) condition, which stipulates that a devaluation or depreciation of its currency will improve a country's trade balance only if the sum of the absolute values of a country's import and export price elasticities are greater than one, is a fundamental tenet of international economics. The purpose of this study is to survey the literature that has tested the M‐L condition, examining in particular whether previous studies' results are statistically significant. The authors then conduct their own estimation of 29 countries' trade elasticities, over the past few decades.Design/methodology/approach – While mostly a review paper, the paper also applies statistical techniques in two ways. First, the authors use t‐tests on previously‐published statistical results to see if the sums of their elasticities are significantly greater than one. The authors also apply the recently developed ARDL cointegration method, which has a number of attractive statistical properties, to estimate 29 ...

107 citations

Journal ArticleDOI
TL;DR: Bahmani et al. as mentioned in this paper studied the effect of exchange rate volatility on trade between the United States and Mexico based on the exports and imports of 102 industries from 1962 to 2004, and found that it plays a role only for a small number of individual industries.
Abstract: [Author Affiliation]Mohsen Bahmani-Oskooee, Department of Economics, P.O. Box 413, Bolton Hall 822, University of Wisconsin-Milwaukee, Milwaukee, WI 53201, USA; Bahmani@uwm.edu; corresponding authorScott W Hegerty, Department of Economics, P.O. Box 413, University of Wisconsin-Milwaukee, Milwaukee, WI 53201, USA; hegertys@beloit.edu[Acknowledgment]We would like to thank our anonymous referees for their valuable comments. Any error, however, is ours.1. IntroductionWith the breakdown of the Bretton Woods system in 1973, real exchange rates began to fluctuate greatly. As volatility increased, exporters and importers could no longer be as certain of the real prices of their goods. This increased risk would affect their expected profits, and thus influence their decision to trade. Exchange rate uncertainty has been shown to have affected trade flows between countries and across sectors, but it has had both positive and negative effects in different studies. Increased volatility has had important implications in assessing the costs and benefits of various exchange rate regimes, as well as of exchange rate controls. In this study, we assess the effect of this volatility on trade between the United States and Mexico based on the exports and imports of 102 industries from 1962 to 2004, and we find that it plays a role only for a small number of individual industries.1Intuitively, one might surmise that uncertainty toward the real price of traded goods may reduce trade flows, as risk-averse buyers and sellers face possible losses due to exchange rate fluctuations, and thus choose not to partake in risky dealings. On the other hand, it has been hypothesized that exchange rate risk can actually increase trade flows, as importers and exporters opt to increase the volume of trade to attain a certain income, making up for a decrease in the per-unit value of a good by increasing the number of units bought or sold. The bulk of the literature points to the former conclusion, as reviewed by McKenzie (1999) and more recently by Bahmani-Oskooee and Hegerty (2007).The trading relationship between Mexico and the United States is an important one. More than 70% of Mexico's exports go to the United States; likewise, Mexico is still the second-largest market for U.S. exports (after Canada). Mexico has taken advantage of its relatively inexpensive labor to attract U.S. manufacturing firms and expand its exports. Mexico imports automobile parts from the United States, for example, and then exports completed automobiles. Assembly-line factories, known as maquiladoras , have attracted much attention, but with the growth of China and competition from its even less expensive labor, this sector has actually declined. In addition, the United States is Mexico's main trading partner for agricultural products. Thus, the two countries share important trade flows across a wide variety of sectors.Table 1 shows a breakdown of Mexico's top 15 export and import industries, in order of largest to smallest dollar value (or trade share), of the 102 industries that we analyze in our study. The rankings are given for the year 1980, in order to capture the preliberalization trade structure, and for the year 2004, to capture flows in the years after Mexico joined the General Agreement on Tarifs and Trade (GATT) and the North American Free Trade Agreement (NAFTA).2Table 1 Top 15 Industries (by Dollar Value of Trade) (Table omitted. See article image.)The most striking observation in Table 1 is that the same manufacturing industries occupy top spots for both exports and imports. Road motor vehicles, exports of which have grown in importance since 1980, were also the top Mexican import in both 1980 and 2004. Likewise, such manufacturing industry categories as Telecommunications apparatus, Other electrical machinery, Machinery and appliances-non electrical, and Office machines make up a large part of both export and import flows. …

97 citations

Journal ArticleDOI
TL;DR: In this paper, the authors used a vector autoregressive approach to assess the contribution of capital inflows to exchange market pressure in these four countries, as well as to the growth of domestic credit.

62 citations


Cited by
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01 Jan 2002
TL;DR: This article investigated whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997) with negative results.
Abstract: We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline

3,770 citations

Posted Content
TL;DR: In this paper, the authors explored the validity of this view using weekly stock return data on 320 industry pairs in six countries from 1975 to 1997, and found that common shocks to industries across countries" are more important than competitive shocks.
Abstract: It is widely accepted that, for some industries, competition across countries is" economically important and that this competition is strongly affected by exchange rate changes." This paper explores the validity of this view using weekly stock return data on 320 industry pairs" in six countries from 1975 to 1997. It is found that common shocks to industries across countries" are more important than competitive shocks. Weekly exchange rate shocks explain almost" nothing of the relative performance of industries. Using returns measured over longer horizons the importance of exchange rate shocks increases slightly and the importance of common shocks" to industries increases more substantially. Both industry and exchange rate shocks are more" important for industries that produce goods traded internationally, but the importance of these" shocks is economically small for these industries as well.

409 citations

Journal ArticleDOI
TL;DR: In this paper, the authors examined the vast empirical literature, up to 2005, to assess the main trends in modeling and estimating these trade flows at the aggregate, bilateral, and sectoral levels.
Abstract: Purpose – Since the last review article by McKenzie, the literature has experienced a surge in the number of empirical articles. These new contributions, coupled with those that were overlooked by McKenzie, set the stage for this review. Many of the recent studies have been empirical in nature and these deserve specific attention. Thus, this paper aims to survey and review all of the studies by paying attention to the attributes outlined in the text.Design/methodology/approach – This paper examines the vast empirical literature, up to 2005, to assess the main trends in modeling and estimating these trade flows at the aggregate, bilateral, and sectoral levels.Findings – The increase in exchange‐rate volatility since 1973 has had indeterminate effects on international export and import flows. Although it can be assumed that an increase in risk may lead to a reduction in economic activity, the theoretical literature provides justifications for positive or insignificant effects as well. Similar results have b...

330 citations

Journal ArticleDOI
TL;DR: Shin et al. as discussed by the authors used non-linear adjustment of variables as well as asymmetric effects of exchange rate changes on the trade balance, using bilateral trade balance models of the U.S. with each of her six largest trading partners.
Abstract: Since introduction of cointegration and error-correction modeling, the definition of the J-curve has changed to reflect short-run deterioration combined with long-run improvement of the trade balance due to currency depreciation. Standard methods such as ARDL approach of Pesaran et al. (2001) assume that adjustment of variables follow a linear path. It is now recognized that the adjustment process could be nonlinear. Application of Non-linear ARDL approach of Shin et al. (2013) provides more evidence of the J-curve supporting non-linear adjustment of variables as well as asymmetric effects of exchange rate changes on the trade balance, using bilateral trade balance models of the U.S. with each of her six largest trading partners.

197 citations