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Is There a J-curve for Azerbaijan? Evidence from Industry-Level Analysis

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  • Jamilov, Rustam

Abstract

This paper has attempted to estimate the J-curve phenomenon for Azerbaijan using quarterly industry-level data over the period 2000-2009. A weighted average of the production indexes of Azerbaijan’s four major trading partners, which account for 70% of Azerbaijan’s total trade turnover, was chosen as a proxy for foreign income. Ten non-oil industries, which amount to 97% of Azerbaijan’s non-oil foreign trade, have been analyzed. A recent technique in cointegration has been employed, which allowed for a simultaneous short-run and long-run analysis of the trade balance model. Empirical results suggest that for 3 of 10 cases there is strong evidence for the fulfillment of the Marshall-Lerner condition, as the trade balance in each of those three industries improves in the long run in response to a currency devaluation. This study does not find any systematic presence of the J-curve effect in the short-run, although a few industries do show certain resembling patterns. The price effect is strong and present in almost all industries. All 10 cases exhibit long-run cointegration and are stable according to the CUSUM and CUSUMSQ stability tests.

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  • Jamilov, Rustam, 2012. "Is There a J-curve for Azerbaijan? Evidence from Industry-Level Analysis," MPRA Paper 39370, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39370
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    References listed on IDEAS

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    12. Mohsen Bahmani‐Oskooee & Artatrana Ratha, 2007. "The S‐curve Dynamics of US Bilateral Trade," Review of International Economics, Wiley Blackwell, vol. 15(2), pages 430-439, May.
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    Cited by:

    1. Peguero, Anadel G. & Cruz-Rodríguez, Alexis, 2016. "Condición Marshall-Lerner y el efecto Curva J: Evidencias para la República Dominicana [Marshall-Lerner Condition and J-Curve Effect: Evidence for the Dominican Republic]," MPRA Paper 71535, University Library of Munich, Germany.
    2. Almira Buzaushina, 2015. "Trade elasticities in transition countries," International Economics and Economic Policy, Springer, vol. 12(2), pages 309-335, June.
    3. Mohsen Bahmani-Oskooee & Rustam Jamilov, 2014. "Export diversification and the S-curve effect in a resource-rich state: evidence from Azerbaijan," Economic Change and Restructuring, Springer, vol. 47(2), pages 135-154, May.

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    More about this item

    Keywords

    Azerbaijan; J-Curve; ARDL Cointegration;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • 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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