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Is There J-Curve Effect In The Commodity Trade Of Singapore With Malaysia? An Empirical Study

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  • MOHSEN BAHMANI-OSKOOEE

    (The Center for Research on International Economics and Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, WI 53201, US)

  • HANAFIAH HARVEY

    (Department of Economics, Penn State University, Mont Alto, PA 17237, US)

Abstract

A previous study that investigated the impact of exchange rate changes on the trade balance of Singapore with each of its 13 largest trading partners on bilateral basis found significant long-run effects in four out of 13 cases. In the trade balance between Singapore and Malaysia as a major partner, the real exchange rate had neither short-run nor long-run significant effects. To reduce the aggregation bias, in this paper, we disaggregate the trade flows between the two countries by industry and consider the trade balance of each of the 136 industries that trade between the two countries. We find that the trade balance of 79 industries are affected by exchange rate changes in the short run. However, short-run effects last into the long run in only 19 industries which mostly happen to be small industries.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Hanafiah Harvey, 2018. "Is There J-Curve Effect In The Commodity Trade Of Singapore With Malaysia? An Empirical Study," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(03), pages 567-591, June.
    • Handle: RePEc:wsi:serxxx:v:63:y:2018:i:03:n:s0217590816500235
    DOI: 10.1142/S0217590816500235
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