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The J-Curve And Korea’S Bilateral Trade: The Role Of Crude Oil Prices

Author

Listed:
  • JIANGQIN XU

    (Business School, Hubei University, Hubei, China)

  • JUNGHO BAEK

    (Department of Economics, School of Management, University of Alaska Fairbanks, USA)

Abstract

Although oil prices likely influence the trade balance via macroeconomy channels (i.e. exchange rates and income), less widely recognized is the possibility of such an effect in investigating the hypothesis of a J-Curve. Thus, the primary thrust of this paper is to investigate the effect of oil prices on the J-Curve using bilateral trade data between Korea and her 14 largest partners. We uncover that the price of crude oil is indeed important in affecting the Korean trade balance and thus further validity evidence of the J-Curve. We further discover that incorporating exchange rate asymmetry provides more evidence supporting the J-Curve in the Korean trade balance.

Suggested Citation

  • Jiangqin Xu & Jungho Baek, 2024. "The J-Curve And Korea’S Bilateral Trade: The Role Of Crude Oil Prices," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 69(01), pages 203-226, March.
    • Handle: RePEc:wsi:serxxx:v:69:y:2024:i:01:n:s0217590820500381
    DOI: 10.1142/S0217590820500381
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    More about this item

    Keywords

    Balance of trade; exchange rate; J-curve; Korea; oil prices;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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