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Is there J-Curve effect in the commodity trade between Korea and rest of the world?

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  • Mohsen Bahmani-Oskooee

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  • Ruixin Zhang

Abstract

Previous studies that investigated the short-run and long-run effects of depreciation of the Korean won on the Korean trade balance with the rest of the world have not been able to discover significant effects. Suspecting that these studies suffer from aggregation bias, we disaggregate Korean trade flows with the rest of the world by commodity and consider the response of trade balances of 148 industries to changes in the real effective exchange rate of the won. We find that in the short run the trade balance of 91 industries are affected by exchange rate changes. However, the short-run effects last into favorable long-run only in 26 industries, a unique finding that is absent from the literature. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Mohsen Bahmani-Oskooee & Ruixin Zhang, 2014. "Is there J-Curve effect in the commodity trade between Korea and rest of the world?," Economic Change and Restructuring, Springer, vol. 47(3), pages 227-250, August.
  • Handle: RePEc:kap:ecopln:v:47:y:2014:i:3:p:227-250
    DOI: 10.1007/s10644-013-9148-5
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bahmani-Oskooee, Mohsen & Baek, Jungho, 2016. "Do exchange rate changes have symmetric or asymmetric effects on the trade balance? Evidence from U.S.–Korea commodity trade," Journal of Asian Economics, Elsevier, vol. 45(C), pages 15-30.
    2. Mohsen Bahmani-Oskooee & Nazif Durmaz, 2016. "Exchange rate volatility and Turkish commodity trade with the rest of the world," Economic Change and Restructuring, Springer, vol. 49(1), pages 1-21, February.
    3. repec:kap:ecopln:v:50:y:2017:i:2:d:10.1007_s10644-016-9187-9 is not listed on IDEAS
    4. Abeer Khandker, 2016. "Why is the South Korean growth experience different? An analysis of the differences of per capita GDP between South Korea and South Asian countries," Economic Change and Restructuring, Springer, vol. 49(1), pages 41-69, February.

    More about this item

    Keywords

    J-Curve; Industry data; Korea; The world; F31;

    JEL classification:

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

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