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The J‐Curve At The Industry Level: Evidence From Trade Between The Us And Australia

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  • MOHSEN BAHMANI‐OSKOOEE
  • YOMGQING WANG

Abstract

Previous studies that tested the J‐curve phenomenon for Australia used trade data either between Australia and the rest of the world or between Australia and its trading partners on a bilateral basis. They were unable to find support for the J‐curve in the short run nor any significant relation between the trade balance and the exchange rate in the long run. In this paper we disaggregate the data between Australia and its second largest trading partner, the US, and consider the trade between 108 industries. Using annual data over the 1962–2003 period and bounds testing approach to cointegration and error‐correction modelling, we are able to discover short‐run effects of currency depreciation on the trade balance in 64 industries. The long‐run and positive effects were only evidenced in 35 cases, supporting the J‐curve.

Suggested Citation

  • Mohsen Bahmani‐Oskooee & Yomgqing Wang, 2007. "The J‐Curve At The Industry Level: Evidence From Trade Between The Us And Australia," Australian Economic Papers, Wiley Blackwell, vol. 46(4), pages 315-328, December.
    • Handle: RePEc:bla:ausecp:v:46:y:2007:i:4:p:315-328
    DOI: 10.1111/j.1467-8454.2007.00322.x
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    References listed on IDEAS

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    7. Mohsen Bahmani‐Oskooee & Gour G. Goswami & Bidyut Kumar Talukdar, 2005. "The Bilateral J‐Curve: Australia Versus Her 23 Trading Partners," Australian Economic Papers, Wiley Blackwell, vol. 44(2), pages 110-120, June.
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    Cited by:

    1. Baek, Jungho & Koo, Won W. & Mulik, Kranti, 2009. "Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(2), pages 1-16, October.
    2. Bahmani-Oskooee, Mohsen & Hegerty, Scott W., 2009. "The Japanese-U.S. trade balance and the yen: Evidence from industry data," Japan and the World Economy, Elsevier, vol. 21(2), pages 161-171, March.
    3. M. Ege Yazgan & Serda Selin Ozturk, 2019. "Real Exchange Rates and the Balance of Trade: Does the J-curve Effect Really Hold?," Open Economies Review, Springer, vol. 30(2), pages 343-373, April.
    4. Houssem Eddine Chebbi & Marcelo Olarreaga, 2011. "Agricultural Trade Balance and Exchange Rate Depreciation: The Case of Tunisia," Working Papers 610, Economic Research Forum, revised 08 Jan 2011.
    5. Trofimov, Ivan D., 2020. "Is There a J-Curve Effect in the Services Trade in Canada? A Panel Data Analysis," MPRA Paper 106704, University Library of Munich, Germany.

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