Further evidence on Orcutt’s hypothesis using Korean–US commodity data

Abstract

Orcutt’s hypothesis in international economics asserts that trade flows respond to exchange rate changes faster than to changes in relative prices. Previous research has provided mixed support by using trade flows of one country with the rest of the world, an aggregate concept. A second group of studies is now emerging which use prices and trade flows at commodity level. We add to this second group by using data from 10 Standard International Trade Classification single-digit industries that trade between Korea and the United States. The hypothesis was supported in small fraction of industries.