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Oil Prices, World Trade Policy Uncertainty, and the Trade Balance: The Case of Korea

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  • Jungho Baek

    (Department of Economics, College of Business and Security Management, University of Alaska, Fairbanks, AK 99775, USA)

Abstract

This article studies the asymmetric effects that the price of crude oil has on Korean exports to and imports from its largest partners—China, the U.S., and Japan—controlling for world trade policy uncertainty. The results support the evidence of the long-run asymmetry of oil prices for Korea’s exports to Japan, and imports from China and Japan. However, there is no evidence of the short-run asymmetry of oil prices. Finally, world trade policy uncertainty appears to be more important for determining Korea’s bilateral trade in the short run than in the long run.

Suggested Citation

  • Jungho Baek, 2023. "Oil Prices, World Trade Policy Uncertainty, and the Trade Balance: The Case of Korea," Commodities, MDPI, vol. 2(3), pages 1-13, June.
    • Handle: RePEc:gam:jcommo:v:2:y:2023:i:3:p:12-200:d:1179627
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    References listed on IDEAS

    as
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    10. Lars E. O. Svensson, 1984. "Oil Prices, Welfare, and the Trade Balance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(4), pages 649-672.
    11. Baek, Jungho, 2020. "An asymmetric approach to the oil prices-trade balance nexus: New evidence from bilateral trade between Korea and her 14 trading partners," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 199-209.
    12. Jungho Baek & Kyoung Doug Kwon, 2019. "Asymmetric effects of oil price changes on the balance of trade: Evidence from selected African countries," The World Economy, Wiley Blackwell, vol. 42(11), pages 3235-3252, November.
    13. Perry Sadorsky, 2003. "The macroeconomic determinants of technology stock price volatility," Review of Financial Economics, John Wiley & Sons, vol. 12(2), pages 191-205.
    14. Jungho Baek & Monday Jerry Ikponmwosa & Yoon Jung Choi, 2019. "Crude oil prices and the balance of trade: Asymmetric evidence from selected OPEC member countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(5), pages 533-547, July.
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    Keywords

    asymmetry; oil prices; NARDL; Korea;
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