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BREXIT and the J-Curve Hypothesis for the UK: A Nonlinear ARDL Approach

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  • Ayşen SİVRİKAYA
  • Serdar ONGAN

Abstract

In this study, we investigate the validity of the J-curve hypothesis based on the bilateral trade models between the UK and its 17 main trading partner countries over the period of 1981Q1-2015Q1, by applying Nonlinear Autoregressive Distributed Lag (NARDL) cointegration approach. The results of this study suggest no evidence supporting the J-curve hypothesis between the UK and any of its 17 trading partners. We also find that depreciations and appreciations in value of the GBP have asymmetric effects on the UK’s trade balances in the short-run. Therefore, the results of this study have potential to shed light on both short run and long run consequences of the recent fluctuations of the GBP with respect to the trade balances after the UK’s EU membership referendum in 2016.

Suggested Citation

  • Ayşen SİVRİKAYA & Serdar ONGAN, 2019. "BREXIT and the J-Curve Hypothesis for the UK: A Nonlinear ARDL Approach," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(40).
    • Handle: RePEc:sos:sosjrn:190214
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    References listed on IDEAS

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    Cited by:

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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