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India's trade with USA and her trade balance: An empirical analysis

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  • Tiwari, Aviral
  • Shahbaz, Muhammad

Abstract

This study explores the affect of India's exchange rate with US on Indian trade balance over the period of 1965-2008. We use ARDL bounds testing approach to cointegration and for dynamic analysis IRFs and VDs. For dynamic analysis impulse response functions and variance decompositions are used. We find cointegrating relationship among the tested variable, positive impact of depreciation in Indian rupee against US dollar and trade policies in previous period on Indian trade balance while an negative impact of money supply and economic growth on trade balance in short span of time. Moreover, J-curve is validated in case of India with US.

Suggested Citation

  • Tiwari, Aviral & Shahbaz, Muhammad, 2011. "India's trade with USA and her trade balance: An empirical analysis," MPRA Paper 29023, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29023
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    More about this item

    Keywords

    ARDL; VDs; IRFs; exchange rate; J-curve; India-US trade relationship;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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