Reports
Discussion Papers
No.542 On the stability of intra-industry trade
by Kazunobu HAYAKAWA , Toshihiro OKUBO and Tadashi ITO
October 2015
ABSTRACT
This paper presents the novel finding that two-way intra-industry trade (IIT) in product–country pairs is very unstable over time by using disaggregated trade data of OECD countries. Many products frequently switch among two-way, one-way and zero trade over time. To measure the stability of two-way trade, we propose a measure that we refer to as the “IIT stability index”. Our estimation results using the proposed measure show that two-way trade involving markets of different sizes and long distance are likely to be unstable. In addition, primary products are more unstable than manufactured products.
Keywords: Two-way trade, Intra-industry trade, Stability
JEL classification: F10, F14
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