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Do Imports and Exports Adjust Nonlinearly? Evidence from 100 Countries

Author

Listed:
  • Arize Augustine C.

    (Department of Economics & Finance, College of Business, Texas A&M Univesity-Commerce, Commerce, TX75429, USA)

  • Bahmani-Oskooee Mohsen

    (The Center for Research on International Economics and Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI 53211, USA)

Abstract

A country is said to live within its international budget constraint if its exports and imports are cointegrated. Previous studies that tried to verify the cointegration between exports and imports used linear models and supported the theory in almost 50% of countries. In this paper, when we use the nonlinear ARDL approach and asymmetry cointegration method, we support the long-run link between imports and exports in 94 out of 100 countries in our sample. This study is not only the most comprehensive study in the literature, but it is also the first to show that, indeed, trade flows adjust in a nonlinear fashion.

Suggested Citation

  • Arize Augustine C. & Bahmani-Oskooee Mohsen, 2018. "Do Imports and Exports Adjust Nonlinearly? Evidence from 100 Countries," Global Economy Journal, De Gruyter, vol. 18(1), pages 1-30, March.
    • Handle: RePEc:bpj:glecon:v:18:y:2018:i:1:p:30:n:3
    DOI: 10.1515/gej-2017-0094
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    Cited by:

    1. Olufemi G. Onatunji, 2023. "Sustainability of current account deficits in Nigeria: evidence from the asymmetric NARDL approach," SN Business & Economics, Springer, vol. 3(10), pages 1-22, October.
    2. Garg, Bhavesh & Prabheesh, K.P., 2021. "Testing the intertemporal sustainability of current account in the presence of endogenous structural breaks: Evidence from the top deficit countries," Economic Modelling, Elsevier, vol. 97(C), pages 365-379.

    More about this item

    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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