How sensitive are Britain's inpayments and outpayments to the value of the British pound

How sensitive are Britain's inpayments and outpayments to the value of the British pound Purpose – To avoid aggregation bias by using trade data at bilateral level so that we can determine how sensitive are Britain's inpayments and outpayments to the value of the British pound. Design/methodology/approach – The method is based on the bounds testing approach to cointegration and error‐correction modeling. Findings – The main finding is that while UK inpayments are not sensitive to the exchange rate, her outpayments are. Research limitations/implications – Future research must concentrate on disaggregating data further, perhaps at commodity level. Practical implications – The results could be used to identify Britain's trading partners against which Britain can devalue the pound and improve her trade balance. Originality/value – No study has attempted to test the impact of real depreciation of the pound on Britain's payments and receipts with her major trading partners. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

How sensitive are Britain's inpayments and outpayments to the value of the British pound

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Publisher
Emerald Publishing
Copyright
Copyright © 2005 Emerald Group Publishing Limited. All rights reserved.
ISSN
0144-3585
DOI
10.1108/01443580510631360
Publisher site
See Article on Publisher Site

Abstract

Purpose – To avoid aggregation bias by using trade data at bilateral level so that we can determine how sensitive are Britain's inpayments and outpayments to the value of the British pound. Design/methodology/approach – The method is based on the bounds testing approach to cointegration and error‐correction modeling. Findings – The main finding is that while UK inpayments are not sensitive to the exchange rate, her outpayments are. Research limitations/implications – Future research must concentrate on disaggregating data further, perhaps at commodity level. Practical implications – The results could be used to identify Britain's trading partners against which Britain can devalue the pound and improve her trade balance. Originality/value – No study has attempted to test the impact of real depreciation of the pound on Britain's payments and receipts with her major trading partners.

Journal

Journal of Economic StudiesEmerald Publishing

Published: Dec 1, 2005

Keywords: United Kingdom; Currency accounting; Trade balances; International trade; Financial management

References

  • Bounds testing approach to the analysis of level relationships
    Pesaran, H.M.; Shin, Y.; Smith, R.J.

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