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Asymmetric J-curve: evidence from UK-German commodity trade

Author

Listed:
  • Mohsen Bahmani-Oskooee

    (The University of Wisconsin-Milwaukee)

  • Huseyin Karamelikli

    (Karabuk University)

Abstract

Previous studies that have investigated the J-curve phenomenon between the UK and its largest trading partner from the European Union (EU), Germany, used aggregate bilateral trade data and found no support for the phenomenon. In this paper, we disaggregate the trade data by industry and investigate the symmetric as well as asymmetric J-curve hypothesis for each of the 95 2-digit industries that trade between the two countries. We found support for the symmetric J-curve effect in 12 industries, but support for the asymmetric J-curve effect 21 industries. Since the asymmetric approach required separating pound depreciation from appreciation, the approach also allowed us to identify industries that could benefit or be hurt from pound depreciation and those that could be hurt or benefit from pound appreciation.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Huseyin Karamelikli, 2021. "Asymmetric J-curve: evidence from UK-German commodity trade," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(4), pages 1029-1081, November.
    • Handle: RePEc:kap:empiri:v:48:y:2021:i:4:d:10.1007_s10663-021-09502-z
    DOI: 10.1007/s10663-021-09502-z
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