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The S-curve dynamics of trade between the US and Korea: Evidence from commodity trade

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  • Mohsen Bahmani-Oskooee
  • Jia Xu

Abstract

The S-curve hypothesis in international economics postulates that while cross-correlation coefficients between past values of a country's trade balance and its current exchange rate may be negative, the same coefficients between future values of the trade balance and the current exchange rate may be positive. Previous research has tested and ultimately supported this hypothesis for Korea by using aggregate trade flows. In this paper we consider the trade between Korea and the US and disaggregate their trade flows by industry. We then test the S-curve at the commodity level to identify industries that will benefit from currency depreciation. Out of 74 industries examined, 39 enjoyed the S-curve pattern, including the three largest industries that account for more than 30% of the trade between the two countries.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Jia Xu, 2014. "The S-curve dynamics of trade between the US and Korea: Evidence from commodity trade," New Zealand Economic Papers, Taylor & Francis Journals, vol. 48(1), pages 40-52, April.
    • Handle: RePEc:taf:nzecpp:v:48:y:2014:i:1:p:40-52
    DOI: 10.1080/00779954.2013.792717
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    Cited by:

    1. Javed Iqbal & Sareer Ahmad & Misbah Nosheen & Mark Wohar, 2023. "Empirical investigation of the S-curve phenomenon in Pakistan-China commodity trade," Economics Bulletin, AccessEcon, vol. 43(4), pages 1853-1864.
    2. 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.
    3. Javed Iqbal & Sitara Jabeen & Misbah Nosheen & Mark Wohar, 2024. "The Asymmetric Effects of Exchange Rate Volatility on Pakistan–Japan Commodity Trade: Evidence from Non-linear ARDL Approach," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(3), pages 657-732, September.

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