LEVEL OF EXPOSURE TO GLOBAL TRADE FLOWS: WHERE DOES THE U.S. ECONOMY STAND?

• Main Author: Kofi Amoateng
• Format: Article
• Language: English
• Published: People & Global Business Association (P&GBA) 2000-09-01
• Series: Global Business and Finance Review
• Subjects: trade flow; currency; consumption expenditures; currency crisis
• Online Access: http://www.gbfrjournal.org/pds/journal/thesis/20150625113710-VX6B1.pdf

Using the cointegration model and Granger causality, this paper explains how trade flows affected the US economy via consumption expenditures in the 1960-93 subperiod. However, trade flows did not significantly affect the US economy in the 1994-98 subperiod because consumption expenditures weakly caused US gross domestic product. Therefore, currency crises in Latin America and East Asia did not produce any negative effects on the US economy in the late 1990s. Thus, high productivity in the technology sector, low petroleum prices due in part to low demand in Asia, massive influx o fforeign capital largely from Asia to the United States, and cheap imported goods from Asia helped the US economy shrug off these currency crises in the late 1990s.