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The J-curve Revisited: An Empirical Analysis for Canada

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  • George Georgopoulos

Abstract

This paper examines exchange rate and trade data to determine whether J-curve effects have occurred for Canada in recent history. With a unique set of data on import and export volumes, the response of the trade balance and its components to exchange rate changes are determined empirically over 1981:1–2005:12 through impulse response functions. The responses have taken into account dominant long-run feedback effects, where the long-run parameters have been estimated by the Johansen cointegration technique. The results show the J-curve phenomenon does not exist for Canada. Robustness checks show the results do not change when looking at the responses over the pre-NAFTA and NAFTA periods. Copyright International Atlantic Economic Society 2008

Suggested Citation

  • George Georgopoulos, 2008. "The J-curve Revisited: An Empirical Analysis for Canada," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 36(3), pages 315-332, September.
    • Handle: RePEc:kap:atlecj:v:36:y:2008:i:3:p:315-332
    DOI: 10.1007/s11293-008-9124-z
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    More about this item

    Keywords

    J-curve; Exchange rate pass-through; Vector autoregressions; Impulse response function; Cointegration; E40; F10; F30; F41;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • F10 - International Economics - - Trade - - - General
    • F30 - International Economics - - International Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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