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Commodity trade between the US and Korea and the J-curve effect

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  • Mohsen Bahmani-Oskooee
  • Jia Xu
  • Sujata Saha

Abstract

Several studies have investigated the impact of currency depreciation on Korean trade balance with the rest of the world and have found no significant effects. Suspecting that these studies could suffer from aggregation bias, another group has disaggregated the Korean trade flows by its trading partners and has investigated the response of the Korean trade balance to depreciation using bilateral trade data between Korea and each of its trading partners. Again, in most instances, they have found no significant effect. In this paper, we concentrate on the bilateral trade between Korea and the US and disaggregate their trade flows further by industry. We investigate the response of the trade balance of 69 industries to currency depreciation and find that the trade balance of 48 industries are affected significantly by changes in the real exchange rate in the short run. However, short-run effects translate to long-run favorable effects only in 24 industries.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Jia Xu & Sujata Saha, 2017. "Commodity trade between the US and Korea and the J-curve effect," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 1-14, January.
    • Handle: RePEc:taf:nzecpp:v:51:y:2017:i:1:p:1-14
    DOI: 10.1080/00779954.2015.1095786
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    Cited by:

    1. Homamul Islam, 2021. "Evaluating the Persistence of j Curve Phenomenon in the Bilateral Trade between Bangladesh and USA: The ARDL Bounds Testing Approach and Granger Causality Analysis," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 7(2), pages 74-81, 06-2021.
    2. Sayeeda Bano & Gazi Hassan, 2018. "An Empirical Examination of the J-Curve: New Zealand's Bilateral Trade with Selected Countries," Working Papers in Economics 18/05, University of Waikato.

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