Journal article

A NEW MEASURE TO QUANTIFY HYSTERESIS LOSSES: THE CASE OF ITALIAN WINE EXPORTS TO THE UNITED STATES


Authors listAdamonis, Jolita; Werner, Laura M.

Publication year2019

Pages2787-2814

JournalMacroeconomic Dynamics

Volume number23

Issue number7

ISSN1365-1005

eISSN1469-8056

DOI Linkhttps://doi.org/10.1017/S1365100517000967

PublisherCambridge University Press


Abstract
This paper introduces a new measure to capture dynamic losses for exporting firms on markets that exhibit hysteresis on the supply side. Our indicator aims to quantify dynamic losses caused by sunk adjustment costs in case of exchange rate fluctuations. While the standard procedure in welfare analysis is to compare two equilibria, we focus on welfare effects that take place during dynamics. We analyze negative dynamic effects on producers' income that are generated due to writing off sunk adjustment costs. As an example, we investigate Italian wine exports to the United States over the period 1995-2013. After testing for hysteresis on the market, we present the indicator of hysteresis losses. It captures a continuous increase of dynamic losses during the period 2003-2008. Moreover, over-proportionately large hysteresis losses are generated in comparison to the exchange rate changes if the pain threshold of the exchange rate (ca. 1.25$/(sic)) is passed.



Citation Styles

Harvard Citation styleAdamonis, J. and Werner, L. (2019) A NEW MEASURE TO QUANTIFY HYSTERESIS LOSSES: THE CASE OF ITALIAN WINE EXPORTS TO THE UNITED STATES, Macroeconomic Dynamics, 23(7), pp. 2787-2814. https://doi.org/10.1017/S1365100517000967

APA Citation styleAdamonis, J., & Werner, L. (2019). A NEW MEASURE TO QUANTIFY HYSTERESIS LOSSES: THE CASE OF ITALIAN WINE EXPORTS TO THE UNITED STATES. Macroeconomic Dynamics. 23(7), 2787-2814. https://doi.org/10.1017/S1365100517000967


Last updated on 2025-02-04 at 00:57