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U.S.-German commodity trade and the J-curve: New evidence from asymmetry analysis

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  • Bahmani-Oskooee, Mohsen
  • Nouira, Ridha

Abstract

Since the introduction of the nonlinear ARDL approach and asymmetric cointegration and error-correction modeling, old relations are receiving renewed attention, and the link between the trade balance and the exchange rate is no exception. We add to this new literature by using industry-level data from 59 2-digit industries that trade between the U.S. and Germany. We find that when the old approach of the linear model was used, the real dollar-euro rate had short-run effects in 17 industries that lasted into the long run in 26 industries. However, when the nonlinear model was estimated, we found short-run asymmetric effects of exchange rate changes in 49 industries, which lasted into long-run asymmetric effects in 28 industries. The J-curve effect was supported in a total of 18 industries.

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  • Bahmani-Oskooee, Mohsen & Nouira, Ridha, 2021. "U.S.-German commodity trade and the J-curve: New evidence from asymmetry analysis," Economic Systems, Elsevier, vol. 45(2).
    • Handle: RePEc:eee:ecosys:v:45:y:2021:i:2:s0939362520300868
    DOI: 10.1016/j.ecosys.2020.100779
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    Cited by:

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    2. Leila Ben Salem & Ridha Nouira & Christophe Rault, 2024. "On the Impact of Oil Prices on Sectoral Inflation: Evidence from World’s Top Oil Exporters and Importers," CESifo Working Paper Series 10879, CESifo.
    3. Serdar Ongan & Huseyin Karamelikli & Mine Aysen Doyran & Ismet Gocer & Charles A. Rarick & John Mellon, 2023. "The Bilateral USA-Mexico Trade Balances Under Decomposed Export Data," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 171-186, December.

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    More about this item

    Keywords

    J-Curve; Industry data; United States; Germany; Asymmetry analysis;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange

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