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Determinants of Imports
The change in imports is closely related to the growth rate in the U.S. economy. The elasticity is greater than unity, so a boom results in a more than proportionate increase in imports. To a certain extent, imports are negatively related to the value of the dollar. However, the elasticity is fairly small because most foreign producers adjust their prices to domestic levels. Thus, for example, when the dollar strengthened, foreign car producers do not boost their prices proportionately.
Determinants of Exports
To a certain extent, the change on exports depends on the growth rate in the rest of the world. However, that growth rate is not independent of what happens in the U.S. In particular, a boom this year is likely to be followed by faster growth abroad next year, while a recession this year is likely to be followed by a slowdown abroad next year. As a result, exports are correlated with the change in domestic economic activity lagged one year. This is known as the repercussion effect. Also, exports are negatively correlated with the value of the dollar; the price elasticity is somewhat greater than for imports.