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The Necessity of New Versions of Bilateral Trade Balances and COVID-19: The Nonlinear ARDL Approach for the USA and Japan

Author

Listed:
  • Ismet Gocer
  • Serdar Ongan
  • Huseyin Karamelikl
  • Charles A. Rarick

Abstract

This study aims to reveal the need to reformulate new forms of Bilateral Trade Balances (BTBs) for a country rather than a traditional BTB. This is because the traditional BTB ratio, based on total exports and defined as the total exports/total imports ratio, cannot classify and quantify a BTB based on its economic impact content. It fails to classify because countries also export goods already imported (denotes re-export) besides exporting their domestic goods produced within the country (denotes domestic export). It also fails to quantify because, while domestic goods undergo a value-added process within a country, re-exported goods do not. In this context, for the first time, this study attempts to reformulate/reinvestigate new forms of BTBs as production-related BTB , based on domestic export and non-production-related BTB , based on re-export for the USA with Japan. Empirical findings confirm the necessity and cruciality of the proposed methodology in this study. JEL Codes: F10, F14

Suggested Citation

  • Ismet Gocer & Serdar Ongan & Huseyin Karamelikl & Charles A. Rarick, 2025. "The Necessity of New Versions of Bilateral Trade Balances and COVID-19: The Nonlinear ARDL Approach for the USA and Japan," Foreign Trade Review, , vol. 60(1), pages 109-136, February.
    • Handle: RePEc:sae:fortra:v:60:y:2025:i:1:p:109-136
    DOI: 10.1177/00157325231192180
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    More about this item

    Keywords

    Production-related bilateral trade balance; non-production-related bilateral trade balance; Nonlinear ARDL Approach; the USA; Japan;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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