A NEW LOOK AT THE TRADE VOLUME EFFECTS OF REAL EXCHANGE RATE RISK

This paper takes a new empirical look at the longstanding question of the effect of exchange rate volatility on international trade flows by studying the case of Taiwan's exports to the United States from 1989-1998. In particular, we employ sectoral level, monthly data and a multivariate GARCH-M estimator with corrections for leptokurtic errors that is consistent with the core hypothesis that traders' forward contracting behavior might be affected by exchange rate risk. We find that real exchange rate risk has insignificant effects in most sectors, although agricultural trade volumes appear highly responsive to real exchange rate volatility. These results differ significantly from those obtained using more conventional and restrictive modeling assumptions.International Relations/Trade, F1, F3,

Approaches and tools to manipulate the carbonate chemistry

Although the chemistry of ocean acidifi cation is very well understood (see chapter 1), its impact on marine organisms and ecosystems remains poorly known. The biological response to ocean acidifi cation is a recent field of research, the fi rst purposeful experiments have only been carried out as late as the 1980s (Agegian, 1985) and most were not performed until the late 1990s. The potentially dire consequences of ocean acidifi cation have attracted the interest of scientists and students with a limited knowledge of the carbonate chemistry and its experimental manipulation. Perturbation experiments are one of the key approaches used to investigate the biological response to elevated p(CO2). Such experiments are based on measurements of physiological or metabolic processes in organisms and communities exposed to seawater with normal and altered carbonate chemistry. The basics of the carbonate chemistry must be understood to perform meaningful CO2 perturbation experiments (see chapter 1). Briefl y, the marine carbonate system considers € CO2 ∗(aq) [the sum of CO2 and H2CO3], € HCO3 −, € CO3 2−, H+, € OH− , and several weak acid-base systems of which borate-boric acid (€ B(OH)4 − , B(OH)3) is the most important. As discussed by Dickson (chapter 1), if two components of the carbonate chemistry are known, all the other components can be calculated for seawater with typical nutrient concentrations at given temperature, salinity, and pressure. One of the possible pairs is of particular interest because both components can be measured with precision, accuracy, and are conservative in the sense that their concentrations do not change with temperature or pressure. Dissolved inorganic carbon (DIC) is the sum of all dissolved inorganic carbon species while total alkalinity (AT) equals € [HCO3 − ] + 2 € [CO3 2− ] + € [B(OH)4 − ] + € [OH− ] - [H+] + minor components, and refl ects the excess of proton acceptors over proton donors with respect to a zero level of protons (see chapter 1 for a detailed defi nition). AT is determined by the titration of seawater with a strong acid and thus can also be regarded as a measure of the buffering capacity. Any changes in any single component of the carbonate system will lead to changes in several, if not all, other components. In other words, it is not possible to vary a single component of the carbonate system while keeping all other components constant. This interdependency in the carbonate system is important to consider when performing CO2 perturbation experiments. To adjust seawater to different p(CO2) levels, the carbonate system can be manipulated in various ways that usually involve changes in AT or DIC. The goal of this chapter is (1) to examine the benefi ts and drawbacks of various manipulation methods used to date and (2) to provide a simple software package to assist the design of perturbation experiments