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A nonlinear approach to the U.S.–Australia commodity trade and the J‐curve: Evidence from 123 industries

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  • Mohsen Bahmani‐Oskooee
  • Hanafiah Harvey

Abstract

The application of nonlinear models and asymmetric analysis have recently proven to yield results that are superior to those of the linear and symmetric analysis. However, the new approaches in testing the J‐curve between Australia and the rest of the world or between Australia and her trading partners such as the United States did not yield any significant outcomes. Suspecting that those results suffer from aggregation bias, we apply new methods to the trade flows of 123 industries that trade between the United States and Australia and give evidence of an asymmetric J‐curve in 28 industries. Furthermore, we find short‐run asymmetric effects of exchange rate changes on the trade balance of almost all studies, short‐run impact asymmetric effects in 27 industries and significant long‐run asymmetric effects in 56 industries. Our findings are industry‐specific.

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  • Mohsen Bahmani‐Oskooee & Hanafiah Harvey, 2019. "A nonlinear approach to the U.S.–Australia commodity trade and the J‐curve: Evidence from 123 industries," Australian Economic Papers, Wiley Blackwell, vol. 58(3), pages 318-363, September.
    • Handle: RePEc:bla:ausecp:v:58:y:2019:i:3:p:318-363
    DOI: 10.1111/1467-8454.12157
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    Cited by:

    1. Mohsen Bahmani‐Oskooee & Jungho Baek, 2021. "On the asymmetric effects of exchange‐rate volatility on trade flows: Evidence from Korea‐U.S. commodity trade," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 594-629, December.

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