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Asymmetric cointegration and the J-curve: new evidence from commodity trade between the U.S. and Canada

Author

Listed:
  • Mohsen Bahmani-Oskooee

    (The University of Wisconsin-Milwaukee)

  • Hadiseh Fariditavana

    (The University of Southern Mississippi)

Abstract

Previous research that investigated asymmetric effects of exchange rate changes on the bilateral trade balance of the U.S. with Canada using their aggregate bilateral trade flows did not find support for such effects. In this paper we disaggregate the trade flows of the two countries by commodity and consider experiences of 161 industry that trade between them. After estimating the linear and nonlinear ARDL models we find support for the asymmetric short-run effects in all industries, short-run adjustment asymmetry in 69 industries, significant short-run cumulative or impact asymmetry in 37 industries and significant long-run asymmetric effects in 62 industries. Small as well as large industries were in the list.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Hadiseh Fariditavana, 2020. "Asymmetric cointegration and the J-curve: new evidence from commodity trade between the U.S. and Canada," International Economics and Economic Policy, Springer, vol. 17(2), pages 427-482, May.
    • Handle: RePEc:kap:iecepo:v:17:y:2020:i:2:d:10.1007_s10368-019-00447-0
    DOI: 10.1007/s10368-019-00447-0
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    References listed on IDEAS

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    Cited by:

    1. Serdar Ongan & Ismet Gocer & Huseyin Karamelikli, 2023. "The US State-Level Geographic J-curve Hypothesis Mapping with Canada," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 43(2), pages 203-240, August.
    2. Bao, Ho Hoang Gia & Le, Hoang Phong, 2021. "ASEAN's trade balance with the whole EU-28 at industry level: The role of vehicle currency," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    3. Bahmani-Oskooee, Mohsen & Harvey, Hanafiah & Halicioglu, Ferda, 2021. "Does the real exchange rate play any role in the trade between Mexico and Canada? An asymmetric analysis," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 1-21.

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    More about this item

    Keywords

    J-curve; Asymmetry Cointegration; Nonlinear ARDL; Industry data; Canada; The U.S;
    All these keywords.

    JEL classification:

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

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