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Bangladesh’s trade partners and the J-curve: an asymmetry analysis

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Mir Obaidur Rahman
  • Mohammad Abdul Kashem

Abstract

Separating currency appreciations from depreciations and using non-linear models in recent literature have improved discovering significant link between the trade balance and the exchange rate. We add to this growing literature by considering the experience of Bangladesh with 11 trading partners. When a linear model was used, support for the J-curve effect was present only with one small partner. However, when a non-linear model was used, support increased to three countries including the largest partner, the United States, which accounts for more than 12% of Bangladesh’s trade. Furthermore, the non-linear models supported short-run asymmetry adjustment as well as short-run asymmetry effects of exchange rate changes in most cases. However, long-run asymmetric effects were limited to a few.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Mir Obaidur Rahman & Mohammad Abdul Kashem, 2019. "Bangladesh’s trade partners and the J-curve: an asymmetry analysis," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 12(2), pages 174-189, May.
    • Handle: RePEc:taf:macfem:v:12:y:2019:i:2:p:174-189
    DOI: 10.1080/17520843.2018.1534873
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    Cited by:

    1. Rabeya Khatoon & Md Emran Hasan & Md Wahid Ferdous Ibon & Shahidul Islam & Jeenat Mehareen & Rubaiya Murshed & Md Nahid Ferdous Pabon & Md. Jillur Rahman & Musharrat Shabnam Shuchi, 2022. "Aggregation, asymmetry, and common factors for Bangladesh’s exchange rate–trade balance relation," Empirical Economics, Springer, vol. 62(6), pages 2739-2770, June.
    2. Mohammed Shuaibu & Abdulrasheed Isah, 2020. "Exchange Rate Dynamics and Trade Balance in Selected African Countries," Journal of African Trade, Springer, vol. 7(1), pages 69-83, December.

    More about this item

    JEL classification:

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

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