The J-Curve: Evidence from East Asia

Lal, Anil K.; Lowinger, Thomas C.

doi:10.11130/jei.2002.17.2.397

Cited by 107 publications

(62 citation statements)

References 15 publications

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“…[29] have investigated the connection involving the exchange rates and balance of trade intended for the seven East Asian economies in the short period as well as in the long period, using the quarterly data from 1980Q1-1998Q4. They 1 st examine stationary condition for each variable in the data set for all the countries.…”

Section: Literature Reviewmentioning

confidence: 99%

Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Khalid¹

2017

EBM

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Abstract:The earlier researches investigated the J-curve hypothesis along with the Marshall-Lerner condition in Pakistan used the OLS, 2SLS, 3SLS, and Instrumental Variables (IV) techniques. The estimates obtained from these studies may suffer from spurious regression problems as the models were estimated without incorporating the co-integrating property of the variables. Hence, the objective of this work is to analyze the trade balance model using relatively the new co-integration approach, the ARDL model. The J-curve phenomenon is tested for Pakistan's trade with her selected South Asian trade partners, including Republic of India and Democratic Socialist Republic of Sri Lanka using the annual time series data over the 1975-2013 periods. After empirical analysis, it was observed that the J-curve occurrence is rejected in favor of Pakistan with its trading partners. This study concludes that depreciation of Pakistani Rupee has a constructive result on Pakistan's trade with these trade partners.

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Section: Literature Reviewmentioning

confidence: 99%

Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Khalid¹

2017

EBM

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“…This ratio, or its inverse used in many empirical investigations of trade balance and nominal exchange rate relationship as referred in ( [5], [14]). [22], [26])…”

Section: Model Specificationmentioning

confidence: 99%

Effect of Exchange Rate on Trade Balance in Major East African Countries: Evidence from Panel Cointegration

Genemo¹

2017

EBM

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This paper attempts an empirical investigation of the impact of exchange rate devaluation on major east African countries trade balance using the panel co-integration and panel group fully modified least square estimation technique from 1990-2014. Whether exchange rate devaluation improves or worsens trade balance has been at the centre of literature debate over time with varying empirical evidences for developed and developing nation. The results indicate that there exist a longrun stationary relationship between trade balance and its determinant-foreign and domestic income, nominal exchange rate as employed in the study. The research major findings include; nominal exchange rate induces inelastic and significant relation on trade balance in the long run. From this, the paper concludes that the trade balance deteriorate with increasing depreciation of exchange rate (as a value effect in east African countries). Again, it found that the coefficient of domestic income is negative and significant implying that the booming of real domestic income increases the purchasing power of their household to import more resulting trade deficit in the long run. Moreover the paper found that inelastic coefficient of nominal exchange rate in line with the theoretical Marshall-Lerner condition i.e. "the demand for import and export is inelastic then devaluation would further increase the trade deficit" [21]. Therefore based on the empirical findings the researcher recommends that the policy maker of these countries should take emphasis not to devaluate exchange rate more and selecting countries with higher income to make import and export elastic and improve trade balance in the long run.

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“…Focusing studies on the Philippines, Miles (1979); Himarios (1985); Bahmani-Oskooee and Malixi (1992); Bahmani-Oskooee and Alse (1994) and Lal and Lowinger (2002) utilized LA and aggregate data. For example, Miles (1979) utilized the Pooled Cross Section on 15 countries and did not find any evidence of J-curve.…”

Section: Introductionmentioning

confidence: 99%

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2018

Asian Economic and Financial Review

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Article History JEL Classification F31.With the advent of econometric modelling, evolutions of research on J-curve has progressed from linear approach (LA) to non-linear approach (NLA) especially in the case of utilizing Autoregressive Distributed Lags (ARDL). This paper applying both approaches examined the case of Philippines and 9 of its largest trading partners. In linear ARDL approach, there are two countries found to be significant. However, using NARDL, evidence shows that three countries to be asymmetric in the short run while in the long run asymmetry effect in the case of Indonesia, Japan and Singapore.

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The J-Curve: Evidence from East Asia

Cited by 107 publications

References 15 publications

Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Effect of Exchange Rate on Trade Balance in Major East African Countries: Evidence from Panel Cointegration

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