IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v38y2006i8p879-888.html
   My bibliography  Save this article

Bilateral J-curve between the UK vis-a-vis her major trading partners

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Charikleia Economidou
  • Gour Goswami

Abstract

Currency depreciation is said to worsen the trade balance first before resulting in an improvement, yielding a short-run pattern labelled the J-curve phenomenon. While early studies tested the J-curve by using aggregate trade data, a few recent studies have employed bilateral data, mostly between the US and her major trading partners. In this paper we extend the literature by considering the experience of the UK. We test the phenomenon between the UK and her twenty major trading partners by employing data over 1973Q1-2001Q3 period. In most instances, we find no support for the J-curve in the short-run. In the long run, only in five cases has the exchange rate had significant impact on the bilateral trade balance.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Charikleia Economidou & Gour Goswami, 2006. "Bilateral J-curve between the UK vis-a-vis her major trading partners," Applied Economics, Taylor & Francis Journals, vol. 38(8), pages 879-888.
    • Handle: RePEc:taf:applec:v:38:y:2006:i:8:p:879-888
    DOI: 10.1080/00036840500399388
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840500399388
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036840500399388?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?," American Economic Review, American Economic Association, vol. 84(1), pages 84-103, March.
    3. Demirden, Tuvana & Pastine, Ivan, 1995. "Flexible exchange rates and the J-curve: An alternative approach," Economics Letters, Elsevier, vol. 48(3-4), pages 373-377, June.
    4. Himarios, Daniel, 1989. "Do Devaluations Improve the Trade Balance? The Evidence Revisited," Economic Inquiry, Western Economic Association International, vol. 27(1), pages 143-168, January.
    5. Anonymous, 1952. "International Monetary Fund," International Organization, Cambridge University Press, vol. 6(3), pages 446-447, August.
    6. Junz, Helen B & Rhomberg, Rudolf R, 1973. "Price Competitiveness in Export Trade Among Industrial Countries," American Economic Review, American Economic Association, vol. 63(2), pages 412-418, May.
    7. Bahmani-Oskooee, Mohsen, 1991. "Is there a long-run relation between the trade balance and the real effective exchange rate of LDCs?," Economics Letters, Elsevier, vol. 36(4), pages 403-407, August.
    8. Mohsen Bahmani-Oskooee & Taggert Brooks, 1999. "Bilateral J-Curve between U.S. and her trading partners," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(1), pages 156-165, March.
    9. Sidney S. Alexander, 1952. "Effects of a Devaluation on a Trade Balance," IMF Staff Papers, Palgrave Macmillan, vol. 2(2), pages 263-278, April.
    10. Felmingham, B S & Divisekera, Sarath, 1986. "The Response of Australia's Trade Balance under Different Exchange Rate Regimes," Australian Economic Papers, Wiley Blackwell, vol. 25(46), pages 33-46, June.
    11. Kanta Marwah & Lawrence R. Klein, 1996. "Estimation of J-Curves: United States and Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 523-539, August.
    12. Gupta-Kapoor Anju & Ramakrishnan Uma, 1999. "Is There A J-Curve? A New Estimation for Japan," International Economic Journal, Taylor & Francis Journals, vol. 13(4), pages 71-79.
    13. Greg Leonard & Alan C. Stockman, 2002. "Current Accounts and Exchange Rates: A New Look at the Evidence," Review of International Economics, Wiley Blackwell, vol. 10(3), pages 483-496, August.
    14. Mohsen Bahmani-Oskooee & Janardhanan Alse, 1994. "Short-Run versus Long-Run Effects of Devaluation: Error-Correction Modeling and Cointegration," Eastern Economic Journal, Eastern Economic Association, vol. 20(4), pages 453-464, Fall.
    15. Swarnjit Arora & Mohsen Bahmani-Oskooee & Gour Goswami, 2003. "Bilateral J-curve between India and her trading partners," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1037-1041.
    16. 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.
    17. Anonymous, 1952. "International Monetary Fund," International Organization, Cambridge University Press, vol. 6(4), pages 644-646, November.
    18. Anonymous, 1952. "International Monetary Fund," International Organization, Cambridge University Press, vol. 6(1), pages 121-125, February.
    19. Mohsen Bahmani-Oskooee & Tatchawan Kantipong, 2001. "Bilateral J-Curve Between Thailand and Her Trading Partners," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 26(2), pages 107-117, December.
    20. Stephen P. Magee, 1973. "Currency Contracts, Pass-Through, and Devaluation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 303-325.
    21. Felmingham, Bruce S, 1988. "Where Is the Australian J-Curve?," Bulletin of Economic Research, Wiley Blackwell, vol. 40(1), pages 43-56, January.
    22. 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.
    23. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    24. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1992. "Dynamics of the trade balance and the terms of trade: the J-curve revisited," Discussion Paper / Institute for Empirical Macroeconomics 65, Federal Reserve Bank of Minneapolis.
    25. Paul D. Koch & Jeffrey A. Rosensweig, 1988. "The U.S. dollar and the \"delayed J-curve.\"," Economic Review, Federal Reserve Bank of Atlanta, issue Jul, pages 2-15.
    26. Bahmani-Oskooee, Mohsen & Malixi, Margaret, 1992. "More evidence on the J curve from LDCs," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 641-653, October.
    27. Brissimis, Sophocles N. & Leventakis, John A., 1989. "The effectiveness of devaluation: A general equilibrium assessment with reference to Greece," Journal of Policy Modeling, Elsevier, vol. 11(2), pages 247-271.
    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. Nabeela KOUSAR* & Muhammad Rizwan YASEEN** & Imran QAISER***, 2017. "THE S-CURVES DYNAMICS OF TRADE: The Case Study of Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(1), pages 121-138.
    2. 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.
    3. 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.
    4. Mohsen Bahmani-Oskooee & Tatchawan Kantipong, 2001. "Bilateral J-Curve Between Thailand and Her Trading Partners," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 26(2), pages 107-117, December.
    5. Mohsen Bahmani‐Oskooee & Yomgqing Wang, 2007. "The J‐Curve At The Industry Level: Evidence From Trade Between The Us And Australia," Australian Economic Papers, Wiley Blackwell, vol. 46(4), pages 315-328, December.
    6. Kimbugwe, Hassan, 2006. "The bilateral J-Curve hypothesis between Turkey and her 9 trading partners," MPRA Paper 4254, University Library of Munich, Germany.
    7. Swarnjit Arora & Mohsen Bahmani-Oskooee & Gour Goswami, 2003. "Bilateral J-curve between India and her trading partners," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1037-1041.
    8. 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.
    9. repec:ebl:ecbull:v:6:y:2007:i:26:p:1-12 is not listed on IDEAS
    10. Mohsen Bahmani-Oskooee & Jehanzeb Cheema, 2009. "Short-Run And Long-Run Effects Of Currency Depreciation On The Bilateral Trade Balance Between Pakistan And Her Major Trading Partners," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(1), pages 19-41, June.
    11. Hernán Rincón, 1999. "Testing the Short-Long-Run Exchange Rate Effects on Trade Balance: The Case of Colombia," Borradores de Economia 120, Banco de la Republica de Colombia.
    12. 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.
    13. Mohsen Bahmani-Oskooee & Zohre Ardalani, 2007. "Is there a J-Curve at the Industry Level?," Economics Bulletin, AccessEcon, vol. 6(26), pages 1-12.
    14. M. Ershad HUSSAIN & Mahfuzul HAQUE, 2014. "Is the J-Curve a Reality in Developing Countries?," Journal of Economics and Political Economy, KSP Journals, vol. 1(2), pages 231-240, December.
    15. Bahmani-Oskooee, Mohsen & Harvey, Hanafiah & Halicioglu, Ferda, 2021. "Does the real exchange rate play any role in the trade between Mexico and Canada? An asymmetric analysis," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 1-21.
    16. Kurtović Safet & Halili Blerim & Maxhuni Nehat, 2017. "Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania," Naše gospodarstvo/Our economy, Sciendo, vol. 63(3), pages 27-36, September.
    17. Hussain, M. Ershad & Haque, Mahfuzul, 2014. "Is the J-Curve a Reality in Developing Countries?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 1(2), pages 231-240.
    18. Salah A. Nusair, 2017. "The J-Curve phenomenon in European transition economies: A nonlinear ARDL approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(1), pages 1-27, January.
    19. 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.
    20. Tarlok Singh, 2007. "Intertemporal Optimizing Models Of Trade And Current Account Balance: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 25-64, February.
    21. Kurtović Safet, 2017. "The Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania," Review of Economic Perspectives, Sciendo, vol. 17(2), pages 141-158, June.

    More about this item

    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:taf:applec:v:38:y:2006:i:8:p:879-888. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    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.