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Measuring the Influence of the J-Curve Effect on Trade in Romanian Forest Products

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  • Gabriela ŢUŢUEANU

    (Bucharest University of Economic Studies, Romania)

Abstract

This paper examines the dynamic effect of the Romanian exchange rate indices on bilateral trade of Romanian forest products namely fibreboard, particle board and pulp for paper. Special attention is given to investigate the J-curve hypothesis: whether the trade balance for Romanian forest products benefits from a decline in the value of Romanian Leu (RON). We adopted the autoregressive distributed lag (ARDL) approach to cointegration to estimate the annual bilateral trade data of Romanian forest products from 1991 to 2013 with various countries in the world. We found no evidence of the J-curve phenomenon for the trade in Romanian forest products. The long-run analysis showed the exchange rate to be insignificant in influencing the trade balance of Romanian forest products. This implies that there are no changes in the trade balance for fibreboard, particle board and pulp for paper trade, regardless of whether the Romanian exchange rate depreciates or appreciates. However, income variables were found to be important factors in determining Romanian trade, only in pulp for paper products.

Suggested Citation

  • Gabriela ŢUŢUEANU, 2015. "Measuring the Influence of the J-Curve Effect on Trade in Romanian Forest Products," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(605), W), pages 75-84, Winter.
    • Handle: RePEc:agr:journl:v:xxii:y:2015:i:4(605):p:75-84
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