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UK-China Trade and the J-Curve: Asymmetric Evidence from 68 Industries

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  • Mohsen Bahmani-Oskooee
  • Huseyin Karamelikli

Abstract

Using monthly data over the period 2010M1-2018M12 we investigate the impact of the real yuna-pound rate on the trade balance of each of the 68 2-digit industries that trade between Britain and China. When a linear ARDL model was estimated, we found short-run symmetric effects in the trade balance of 45 industries that lasted into the long run only in 24 industries. Comparable numbers from the estimates of the nonlinear model were 64 and 39, respectively. The symmetric (asymmetric) J-curve effect received support in 17 (19) industries from the linear (nonlinear) model. Although the increase from the symmetric to asymmetric J-curve effect was not substantial, for the largest industry, i.e., industry coded 85 (Electrical machinery and equipment with 19.56% share of trade), while the symmetric J-curve was not supported, the asymmetric J-curve was. This highlights the significance of the nonlinear adjustment of the yuan-pound exchange rate.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Huseyin Karamelikli, 2021. "UK-China Trade and the J-Curve: Asymmetric Evidence from 68 Industries," Chinese Economy, Taylor & Francis Journals, vol. 54(3), pages 195-216, May.
    • Handle: RePEc:mes:chinec:v:54:y:2021:i:3:p:195-216
    DOI: 10.1080/10971475.2020.1848470
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    Cited by:

    1. Serdar Ongan & Huseyin Karamelikli & Mine Aysen Doyran & Ismet Gocer & Charles A. Rarick & John Mellon, 2023. "The Bilateral USA-Mexico Trade Balances Under Decomposed Export Data," Journal of Industry, Competition and Trade, Springer, vol. 23(3), pages 171-186, December.
    2. 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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