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Do oil price changes really matter to the trade balance? Evidence from Korea‐ASEAN commodity trade data

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  • Jungho Baek
  • Yoon Jung Choi

Abstract

The contribution of this article is to assess the effect of oil prices have on the trade balance in the framework of bilateral commodity trade data between Korea and each of the four ASEAN member countries—Indonesia, Malaysia, Singapore, and Thailand. To examine this subject thoroughly, we first assume the effects of oil price changes to be symmetric and apply the linear autoregressive distributed lag (ARDL) method to the subject. We find that the price of crude oil indeed has an important role in affecting Korea's trade balance with those four ASEAN economies in both the long‐ and short‐run. We then separate oil price hikes from oil price plunges and implement the nonlinear ARDL method to reveal that there is evidence that changes in oil prices appear to have asymmetric effects on the trade balance for certain products in the long‐ and short‐run.

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  • Jungho Baek & Yoon Jung Choi, 2020. "Do oil price changes really matter to the trade balance? Evidence from Korea‐ASEAN commodity trade data," Australian Economic Papers, Wiley Blackwell, vol. 59(3), pages 250-278, September.
    • Handle: RePEc:bla:ausecp:v:59:y:2020:i:3:p:250-278
    DOI: 10.1111/1467-8454.12180
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    4. 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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    6. Jungho Baek, 2022. "Not all oil shocks on the trade balance are alike: Empirical evidence from South Korea," Australian Economic Papers, Wiley Blackwell, vol. 61(2), pages 291-303, June.

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