IDEAS home Printed from https://ideas.repec.org/p/gtr/gatrjs/jber170.html
   My bibliography  Save this paper

Dynamic Perspective of Trade Balance: Evidence from Southeast Asia before the Global Financial Crisis of 2008

Author

Listed:
  • Putu Mahardika Adi Saputra

    (Department of Economics, University of Brawijaya, Indonesia. Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective � This paper studies the influence of some determinants of trade balance for Southeast Asia countries in dynamics perspective before the global financial crisis of 2008. Methodology/Technique � Based on quarterly data (1980q1 to 2007q3), the investigation is carried out using VECM. Findings � The results show that in the long run: (i) income effect is found to be dominant in determining the change in trade balance; (ii) the cash balance effect does influence bilateral trade; (iii) bilateral trade is affected by exchange rate movements. Further, the effect of small economies are suspected to be present in Southeast Asia region. Meanwhile, in the short run: (i) the cash balance effect plays a major role in influencing trade balance improvement; (ii) compared to the cash balance effect, the income effect is present with slightly less contribution; (iii) the exchange rate effect is observed in the analysis, while a J-curve phenomenon exists in minor cases. Novelty � This paper concludes that in the long term, income effect is found to be dominant in determining the change in trade balance. Type of Paper: Empirical

Suggested Citation

  • Putu Mahardika Adi Saputra, 2019. "Dynamic Perspective of Trade Balance: Evidence from Southeast Asia before the Global Financial Crisis of 2008," GATR Journals jber170, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jber170
    as

    Download full text from publisher

    File URL: http://gatrenterprise.com/GATRJournals/pdf_files/JBER%20Vol%204(1)/7.Putu%20Mahardika%20Adi%20Saputra.pdf
    Download Restriction: http://gatrenterprise.com/GATRJournals/online_submission.html
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
    2. Li, Bingjing, 2018. "Export expansion, skill acquisition and industry specialization: evidence from china," Journal of International Economics, Elsevier, vol. 114(C), pages 346-361.
    3. Singh, Tarlok, 2002. "India's trade balance: the role of income and exchange rates," Journal of Policy Modeling, Elsevier, vol. 24(5), pages 437-452, August.
    4. Olugbenga Onafowora, 2003. "Exchange rate and trade balance in east asia: is there a J-curve?," Economics Bulletin, AccessEcon, vol. 5(18), pages 1-13.
    5. Naito, Takumi, 2017. "An asymmetric Melitz model of trade and growth," Economics Letters, Elsevier, vol. 158(C), pages 80-83.
    6. Sasaki, Yuri & Yoshida, Yushi, 2018. "Decomposition of Japan's trade balance," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 507-537.
    7. Soderbery, Anson, 2018. "Trade elasticities, heterogeneity, and optimal tariffs," Journal of International Economics, Elsevier, vol. 114(C), pages 44-62.
    8. Bahmani-Oskooee, Mohsen, 1985. "Devaluation and the J-Curve: Some Evidence from LDCs," The Review of Economics and Statistics, MIT Press, vol. 67(3), pages 500-504, August.
    9. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151, December.
    10. M. Bahmani-Oskooee & Gour Goswami, 2003. "A disaggregated approach to test the J-Curve phenomenon: Japan versus her major trading partners," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 27(1), pages 102-113, March.
    11. Rose, Andrew K., 1991. "The role of exchange rates in a popular model of international trade : Does the 'Marshall-Lerner' condition hold?," Journal of International Economics, Elsevier, vol. 30(3-4), pages 301-316, May.
    12. Caporale, Guglielmo Maria & Sova, Anamaria & Sova, Robert, 2015. "Trade flows and trade specialisation: The case of China," China Economic Review, Elsevier, vol. 34(C), pages 261-273.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gong, Li & Kinnucan, Henry, 2015. "Effects of Recession and Dollar Weakening on the U.S. Agricultural Trade Balance," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196612, Southern Agricultural Economics Association.
    2. Yi‐Bin Chiu & Chia‐Hung Sun, 2009. "Economic interdependence and bilateral trade imbalance across the Taiwan Strait," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 36(4), pages 411-432, September.
    3. Baek, Jungho & Koo, Won W. & Mulik, Kranti, 2009. "Exchange Rate Dynamics and the Bilateral Trade Balance: The Case of U.S. Agriculture," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 213-228, October.
    4. Kurtovic Safet & Halili Blerim & Maxhuni Nehat, 2017. "Bilateral Trade Elasticity of Serbia and Her Trading Partners," Review of Economics, De Gruyter, vol. 68(3), pages 181-204, December.
    5. Bahmani-Oskooee, Mohsen & Hegerty, Scott W., 2009. "The Japanese-U.S. trade balance and the yen: Evidence from industry data," Japan and the World Economy, Elsevier, vol. 21(2), pages 161-171, March.
    6. Huseyin Kalyoncu & Ilhan Ozturk & Seyfettin Artan & Kahraman Kalyoncu, 2009. "Devaluation and trade balance in Latin American countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 27(1), pages 115-128.
    7. Cem IŞIK & Magdalena RADULESCU & Aleksandra FEDAJEV, 2019. "The effects of exchange rate depreciations and appreciations on the tourism trade balance: the case of Spain," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 10, pages 221-237, June.
    8. Drama, Bedi Guy Herve, 2010. "The Effects of Real Exchange Rate on Trade Balance in Cote d’Ivoire: Evidence from the Cointegration Analysis and Error-Correction Models," MPRA Paper 21810, University Library of Munich, Germany.
    9. Shah, Anwar & Majeed, Muhammad Tariq, 2014. "Real Exchange Rate and Trade Balance in Pakistan: An ARDL Co-integration Approach," MPRA Paper 57674, University Library of Munich, Germany.
    10. Hsing Yu, 2008. "A Study of the J-Curve for Seven Selected Latin American Countries," Global Economy Journal, De Gruyter, vol. 8(4), pages 1-14, December.
    11. Halicioglu, Ferda, 2008. "The bilateral J-curve: Turkey versus her 13 trading partners," Journal of Asian Economics, Elsevier, vol. 19(3), pages 236-243, June.
    12. Hsing, Yu, 2009. "Test of the J-curve for the DR-CAFTA countries and policy implications," Research in International Business and Finance, Elsevier, vol. 23(3), pages 293-301, September.
    13. 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).
    14. Sajad Ahmad Bhat & Javed Ahmad Bhat, 2021. "Impact of Exchange Rate Changes on the Trade Balance of India: An Asymmetric Nonlinear Cointegration Approach," Foreign Trade Review, , vol. 56(1), pages 71-88, February.
    15. Martin Gürtler, 2019. "Dynamic analysis of trade balance behavior in a small open economy: the J-curve phenomenon and the Czech economy," Empirical Economics, Springer, vol. 56(2), pages 469-497, February.
    16. Waliullah & Mehmood Khan Kakar & Rehmatullah Kakar & Wakeel Khan, 2010. "The Determinants of Pakistan’s Trade Balance: An ARDL Cointegration Approach," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 15(1), pages 1-26, Jan-Jun.
    17. Baek, Jungho & Mulik, Kranti & Koo, Won W., 2006. "The J-Curve Phenomenon: Myth or Reality?," 2006 Annual meeting, July 23-26, Long Beach, CA 21382, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Mohsen Bahmani-Oskooee & Ali Kutan, 2009. "The J-curve in the emerging economies of Eastern Europe," Applied Economics, Taylor & Francis Journals, vol. 41(20), pages 2523-2532.
    19. Mahdi Ghodsi & Mohammad Sharif Karimi & Robert Stehrer, 2020. "Does Asymmetric Nonlinear Approach Explain the Relationship Between Exchange Rate and Trade of Iran?," wiiw Working Papers 187, The Vienna Institute for International Economic Studies, wiiw.
    20. Shahbaz, Muhammad & Jalil, Abdul & Islam, Faridul, 2010. "Real Exchange Rate Changes and Trade Balance in Pakistan: A Revisit," MPRA Paper 27631, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gtr:gatrjs:jber170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Dr. Abd Rahim Mohamad (email available below). General contact details of provider: http://gatrenterprise.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.