IMPACT OF THE EXCHANGE RATE TO TRADE BALANCE BETWEEN SERBIA AND EUROZONE: THE J CURVE EFFECT

Предраг Петровић

DOI Number
Array
First page
1051
Last page
1067

Abstract


This paper is dedicated to the research of the effects of the J curve in the scope of Serbia – Eurozone trade balance in the period between 2006 and 2014. The analysis has been conducted based on the concept of time series cointegration, using АRDL bounds testing approach, after which the robustness of the obtained findings was checked by estimation of the ARDL model at the level of first differences. The obtained results provide for quite reliable proofs that the J curve effects exist between Serbia and Eurozone, i.e. that short-term influence of real exchange rate to trade balance is negative, while long-term one is positive. These findings are quite reliable, although they are not completely confirmed through the estimation of the ARDL model at the first difference levels, since the testing has been conducted using critical values simulated for small samples.

Keywords

J curve effect, real exchange rate, trade balance, cointegration.

Full Text:

PDF (Cрпски)

References


Bahmani-Oskooee, M., & Harvey, H. (2014). U.S.-Singapore commodity trade and the J-Curve. Asian Economic and Financial Review, 4(10), 1473–1484.

Bahmani-Oskooee, M., & Hegerty, S.W. (2009). The Japanese–U.S. trade balance and the yen: Evidence from industry data. Japan and the World Economy, 21, 161–171. doi:10.1016/j.japwor.2008.02.001

Bahmani-Oskooee, M., & Hegerty, S.W. (2010). The J-and S-Curves: A survey of the recent literature. Journal of Economic Studies, 37(6), 580–596. doi 10.1108/01443581011086639

Bahmani-Oskooee, M., & Hegerty, S.W. (2011). The J-Curve and NAFTA: Evidence from commodity trade between the US and Mexico. Applied Economics, 43, 1579–1593. doi 10.1080/00036840802360328

Bahmani-Oskooee, M., & Ratha, A. (2004). The J-Curve: A literature review. Applied Economics, 36, 1377–1398. doi 10.1080/0003684042000201794

Bahmani-Oskooee, M., & Zhang, R. (2013). The J-Curve: Evidence from commodity trade between UK and China. Applied Economics, 45(31), 4369–4378. doi 10.1080/00036846.2013.783680

Bahmani-Oskooee, M., & Zhang, R. (2014). Is there J-Curve effect in the commodity trade between Korea and rest of the world?. Economic Change and Restructuring, 47, 227–250.

Bahmani-Oskooee, M., Bolhassani, M., & Hegerty, S.W. (2011). Industry trade between Canada and Mexico: Will a weakening peso help Mexican manufacturing in the long run?. North American Journal of Economics and Finance, 22, 89–101. doi:10.1016/j.najef.2010.09.002

Bahmani-Oskooee, M., Harvey, H., & Hegerty, S.W. (2014). Industry trade and exchange-rate fluctuations: Evidence from the U.S. and Chile. International Review of Economics and Finance, 29, 619–626. doi 10.1016/j.iref.2013.10.001

Hameed, A., & Kanwal, S. (2009). Existence of a J-Curve-the case of Pakistan. Journal of Economic Cooperation and Development, 30(2), 75–98.

Harvey, H. (2013). Exchange rate sensitivity in the Philippines: Does the J-Curve exist?. Asian Journal of Business and Management Sciences, 2(10), 51–61.

Kyophilavong, P., Shahbaz, M., & Salah Uddin, G. (2013). Does J-Curve phenomenon exist in case of Laos? An ARDL Approach. MPRA Paper No. 48084. http://mpra.ub.uni-muenchen.de/48084.

Narayan, P. K. (2005). The saving and investment nexus for China: Evidence from cointegration tests. Applied Economics, 37, 1979–1990. doi: 10.1080/00036840500278103

Pesaran, M. H., Shin, Y., & Smith, R.J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. doi:10.1002/jae.616

Suleman, S., Raza Cheema, A., Faraz Riaz, M., Muhammd Yousaf, M., & Shehzadi, A. (2014). Time series investigation of J-Curve of Pakistan with Saudi Arabia. Journal of Finance and Economics. 2(6), 210–214. doi:10.12691/jfe-2-6-2


Refbacks

  • There are currently no refbacks.


© University of Niš, Serbia
Creative Commons licence CC BY-NC-ND
Print ISSN: 0353-7919
Online ISSN: 1820-7804