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German-US Commodity Trade: Is there a J-Curve Effect?

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Masoomeh Hajilee

Abstract

The short-run and long-run effects of currency depreciation on the trade balance of Germany have been investigated by several studies. Studies that have used aggregate trade data between Germany and the rest of the world have been said to suffer from aggregation bias. Those that disaggregated their trade data by trading partners and looked at the response of bilateral trade found neither short-run nor long-run effects. In this paper, we disaggregate bilateral trade data between Germany and the US by commodity and consider the response of the trade balance of 131 industries to real depreciations of the euro. We find that while in the short run, 91 industries respond to the depreciation of euro, these short-run effects last into the long run in 59 industries. Furthermore, the J-curve pattern was discovered in 31 cases.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Masoomeh Hajilee, 2012. "German-US Commodity Trade: Is there a J-Curve Effect?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 58(4), pages 327-353.
    • Handle: RePEc:aeq:aeqaeq:v58_y2012_i4_q4_p327-353
    DOI: 10.3790/aeq.58.4.327
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    Citations

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    Cited by:

    1. Kwame Akosah, Nana & Omane-Adjepong, Maurice, 2017. "Exchange Rate and External Trade Flows: Empirical Evidence of J-Curve Effect in Ghana," MPRA Paper 86640, University Library of Munich, Germany, revised Dec 2017.
    2. Salah A. Nusair, 2017. "The J-Curve phenomenon in European transition economies: A nonlinear ARDL approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(1), pages 1-27, January.
    3. Mohsen Bahmani-Oskooee and Hanafiah Harvey, 2018. "The U.S. Trade Balance with Partners from Developing World: An Asymmetry Analysis of the J-Curve Effect," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 43(2), pages 29-44, June.
    4. Peguero, Anadel G. & Cruz-Rodríguez, Alexis, 2016. "Condición Marshall-Lerner y el efecto Curva J: Evidencias para la República Dominicana [Marshall-Lerner Condition and J-Curve Effect: Evidence for the Dominican Republic]," MPRA Paper 71535, University Library of Munich, Germany.
    5. Bilal KARGI, 2014. "Time Series Analysis about the Relationship between Foreign Trade and Exchange Rate in Turkish Economy," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 7(2), pages 123-133, December.
    6. Lucio Gobbi & Stefano Lucarelli, 2021. "ECB quantitative easing, euro depreciation and supply chains: Industry-level estimates for Germany, Italy and Greece. New prospects for a Minskyan big bank?," PSL Quarterly Review, Economia civile, vol. 74(296), pages 25-50.
    7. 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).

    More about this item

    Keywords

    J-curve; industry data; bounds testing; Germany; the United States;
    All these keywords.

    JEL classification:

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

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