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Asymmetry cointegration and the J-curve: new evidence from Korean bilateral trade balance models with her 14 partners

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  • Mohsen Bahmani-Oskooee
  • Jungho Baek

Abstract

Introduction of new econometric methods raises interest in assessing the old theories and the J-curve phenomenon is no exception. Like previous research, we first use the linear autoregressive distributed lag (ARDL) approach to investigate the phenomenon between Korea and each of her 14 trading partners. We then employ the recent nonlinear ARDL approach to show that in most cases, exchange-rate changes have short-run and long-run asymmetric effects on bilateral trade balances. Separating depreciations from appreciations, which is the main feature of the nonlinear model, relies upon nonlinear adjustment of the exchange rate and provides relatively more support for the J-curve effect.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Jungho Baek, 2019. "Asymmetry cointegration and the J-curve: new evidence from Korean bilateral trade balance models with her 14 partners," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 24(1), pages 66-81, January.
    • Handle: RePEc:taf:rjapxx:v:24:y:2019:i:1:p:66-81
    DOI: 10.1080/13547860.2018.1469589
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    18. Mohsen Bahmani-Oskooee & Artatrana Ratha, 2004. "Dynamics of the U.S. trade with developing countries," Journal of Developing Areas, Tennessee State University, College of Business, vol. 37(2), pages 1-11, January-M.
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    2. Ho Hoang Gia Bao & Hoang Phong Le, 2022. "The Roles of Vehicle Currency and Real Effective Exchange Rates in the Trade of Every ASEAN Member With the EU-28," SAGE Open, , vol. 12(2), pages 21582440221, April.
    3. Shengliang Zhao & Lixin Liu, 2023. "Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 37(2), pages 142-164, November.

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    • F1 - International Economics - - Trade
    • F3 - International Economics - - International Finance

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