Three Essays on International Trade and Finance

Authors

Syed A. UddinFollow

Document Type

Dissertation

Degree

Doctor of Philosophy (PhD)

Major/Program

Economics

First Advisor's Name

Hakan Yilmazkuday

First Advisor's Committee Title

Committee chair

Second Advisor's Name

Prasad Bidarkota

Second Advisor's Committee Title

Committee member

Third Advisor's Name

Mihaela Pintea

Third Advisor's Committee Title

Committee member

Fourth Advisor's Name

Pallab Mozumder

Fourth Advisor's Committee Title

Committee member

Keywords

Value-added trade, Exchange Rate Pass-through, Pricing-to-market, Daily Prices, Product level trade

Date of Defense

6-8-2017

Abstract

This dissertation is composed of three essays at the intersection of international trade and finance. In the first chapter, I measure exchange rate pass-through (ERPT) for value-added exports, where intermediate input requires sharing among countries in a back-and-forth manner for producing a single final product. I derive an estimating equation for ERPT and value-added trade following a partial equilibrium model, which also leads to decomposition of the trade elasticity into the own price effect and the price index effects. From the empirical estimation, I find that ignoring the value-added trade will cause a systematic upward bias in the estimation of ERPT. I also find that there exists substantial heterogeneity in pass-through rates across sectors: sectors with high-integration into global markets functions with a lower rate of exchange in comparison to sectors with less integration.

The second essay focuses on a specific market, where I examine the relationship between product attributes and ERPT. This paper estimates the ERPT by using good-level daily data on wholesale prices of imported agricultural products, where the identification is achieved by using daily data on the domestic inflation rate. The results of standard empirical analyses are in line with existing studies that employ lower frequencies of data by showing evidence for incomplete daily ERPT of about 5 percent. The key innovation is achieved when nonlinearities in ERPT are considered, where ERPT is doubled to about 10 percent when daily nominal

exchange rate changes are above 0.55 percent, daily frequencies of price change are above 3.12 percent, the storage life of a product is above 10 weeks, and for the non-zero price changes, the ERPT is complete.

In the final essay, I focus on the firms’ export pricing strategy: pricing-to-market strategy. To achieve this, I introduce a partial equilibrium model of firm’s pricing strategy, where the market share of a firm plays an important role in the determination of markup. The empirical estimation is that markup ranges from 1.25 to 1.5 across years and 1.25 to 51.23 across firms. I also find that markups come back to their average level within 30 to 60 days of the initial date.

Identifier

FIDC001914

Creative Commons License

This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Recommended Citation

Uddin, Syed A., "Three Essays on International Trade and Finance" (2017). FIU Electronic Theses and Dissertations. 3480.
https://digitalcommons.fiu.edu/etd/3480