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A Test for Hysteresis in International Trade
Author(s) -
Denadai Ricardo,
Teles Vladimir K.
Publication year - 2016
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12243
Subject(s) - hysteresis , cointegration , economics , macro , econometrics , term (time) , test (biology) , point (geometry) , state space , physics , mathematics , statistics , computer science , geology , condensed matter physics , paleontology , geometry , quantum mechanics , programming language
The article suggests a new test for strong hysteresis, that is, at the macro level, in international trade. The variables that capture the effects of hysteresis are based on a theoretical model with calibrations using a state–space model to determine the parameters for each point in time. These variables are then applied to a cointegration test with breaks, where it is possible to verify whether the hysteresis effect is essential in determining the long‐term equilibrium.