Determinants of International Trade Flows

THIS paper models and estimates import demand and demand for export functions for 19 industrial countries. Although primary emphasis is placed on the period of generalized floating exchange rates, 1972 through 1980, estimates are also provided for the fixed exchange rate years (1957-1970), thus making possible a comparison between the two eras. Aside from the conventional income and price variables, the paper assesses the effect of variations in the exchange rate and in the expected exchange rate, on real trade flows. Additionally, it estimates an unrestricted lag structure of the effect of price and exchange rate variations on imports.