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Does J-Curve Phenomenon Exist in Case of Laos? An ARDL Approach

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  • Kyophilavong, Phouphet
  • Shahbaz, Muhammad
  • Salah Uddin, Gazi

Abstract

This study aims to test the existence of J-curve phenomenon in Laos economy using quarterly data over the period of 1993-2010. The ARDL bounds testing approach to cointegration is used to examine short run as well as long run impact of real depreciation of Lao kip on Lao trade balance. The empirical results suggest that there is J-curve effect in case of Laos. The impact of real depreciation of the Lao kip on Lao trade balance is insignificant in long run. In short-run, real depreciation has inverse impact on Lao’s trade balance. The long-run trade balance is determined by domestic income.

Suggested Citation

  • Kyophilavong, Phouphet & Shahbaz, Muhammad & Salah Uddin, Gazi, 2013. "Does J-Curve Phenomenon Exist in Case of Laos? An ARDL Approach," MPRA Paper 48084, University Library of Munich, Germany, revised 04 Jul 2013.
  • Handle: RePEc:pra:mprapa:48084
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    2. Kris Ivanovski & Sefa Awaworyi Churchill & Ahmed Salim Nuhu, 2020. "Modelling the Australian J‐Curve: An ARDL Cointegration Approach," Economic Papers, The Economic Society of Australia, vol. 39(2), pages 167-184, June.
    3. Yannick Bineau, 2016. "Real exchange rate and bilateral trade balance of Cambodia: A panel investigation," Economics Bulletin, AccessEcon, vol. 36(2), pages 895-900.
    4. Elham Shubaita & Muhammad Mar’i & Mehdi Seraj, 2020. "Investigating in the J-curve phenomenon in Tunisia- ARDL bound test approach," Journal of Economics and Behavioral Studies, AMH International, vol. 12(5), pages 23-32.
    5. Phouphet Kyophilavong & Muhammad Shahbaz & Thongphet Lamphayphan & Byoungki Kim & Michael C. S. Wong, 2019. "Are Devaluations Expansionary in Laos?," Global Business Review, International Management Institute, vol. 20(1), pages 72-83, February.
    6. Phouphet Kyophilavong & Gazi Salah Uddin & Muhammad Shahbaz & Charles Harvie & Teerawat Charoenrat, 2019. "Money Demand in a Dollarized Economy: Evidence from Laos PDR," Asian Economic Papers, MIT Press, vol. 18(1), pages 99-115, Winter/Sp.
    7. Sayeeda Bano & Gazi Hassan, 2018. "An Empirical Examination of the J-Curve: New Zealand's Bilateral Trade with Selected Countries," Working Papers in Economics 18/05, University of Waikato.
    8. Junaid Masih & Dongsheng Liu & Javed Pervaiz, 2018. "The Relationship between RMB Exchange Rate and Chinese Trade Balance: Evidence from a Bootstrap Rolling Window Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(2), pages 35-47, February.
    9. Dene T. Hurley & Nikolaos Papanikolaou, 2018. "An Investigation of China‐U.S. Bilateral Trade and Exchange Rate Changes Using the Autoregressive Distributed Lag Model," Economic Papers, The Economic Society of Australia, vol. 37(2), pages 162-179, June.

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    Keywords

    J-curve; ARDL approach; Laos;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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