Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Global Economy Journal

The Official Publication of the International Trade and Finance Association

Ed. by Pelzman, Joseph


CiteScore 2018: 0.33

SCImago Journal Rank (SJR) 2018: 0.157
Source Normalized Impact per Paper (SNIP) 2018: 0.402

More options …
Volume 13, Issue 1

Issues

Pakistan-EU Commodity Trade: Is there Evidence of J-Curve Effect?

Mohsen Bahmani-Oskooee
  • Corresponding author
  • Center for Research on International Economics, University of Wisconsin, Milwaukee, WI 53201, USA
  • Email
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Javed Iqbal / Muhammad Muzammil
Published Online: 2017-02-15 | DOI: https://doi.org/10.1515/gej-2016-0067

Abstract

In investigating the short run and the long run impact of currency depreciation on Pakistan’s trade balance, previous studies have either relied on using bilateral trade data between Pakistan and her trade partners or between Pakistan and the rest of the world and have found not much support for successful depreciation. Suspecting that these studies may suffer from aggregation bias, in this paper we use disaggregated trade data at commodity level from 77 industries that trade between Pakistan and EU. While we find short-run significant effects in 22 industries, these effects do not last into the long run in most industries. Most of the affected industries are found to be small, as measured by their trade shares.

This article offers supplementary material which is provided at the end of the article.

Keywords: J-Curve; bound testing; commodity trade; Pakistan; EU

JEL Classification: F31

References

  • Aftab, Z, and Aurangzeb. 2002. “The Long Run and Short Run Impact of Exchange Rate Devaluation on Pakistan’s Trade Performance.” The Pakistan Development Review 4(3): 277–286.Google Scholar

  • Aftab, Z, and S Khan. (2008).Pide Working Paper No 2008:45 Bilateral J-Curve Between Pakistan and Her Trading Partners.Google Scholar

  • Akhtar, S, and F Malik. 2000. “Pakistan Trade Performance Vis-a- vis its Major Trading Partners.” The Pakistan Development Review 39(1): 37–50.Google Scholar

  • Bahmani-Oskooee, M. 1985. “Devaluation and J-Curve: Some Evidence from LDCs.” The Review of Economic and Statistics 500–504.Google Scholar

  • Bahmani-Oskooee, M. 1986. “Determinants of International Trade Flows: The Case of Developing Countries.” Journal of Development Economics 20: 107–123.CrossrefGoogle Scholar

  • Bahmani-Oskooee, M, and J Cheema. 2009. “Short-Run and Long-Run Effects of Currency Depreciation on the Bilateral Trade Balance Between Pakistan and Her Major Trading Partners.” Journal of Economic Development 34(1): 19–46.Google Scholar

  • Bahmani-Oskooee, M, H Harvey, and S Hegerty. 2013. “Empirical Tests of the Marshall-Lerner Condition: A Literature Review.” Journal of Economic Studies 40: 411–443.CrossrefGoogle Scholar

  • Bahmani-Oskooee, M, and S Hegerty. 2010. “The J- and S-Curves: A Survey of the Recent Literature.” Journal of Economic Studies 37: 580–596.CrossrefGoogle Scholar

  • Bahmani-Oskooee, M, and O Kara. 2005. “Income and Price Elasticities of Trade: Some New Estimates.” International Trade Journal 19: 165–178.Google Scholar

  • Bahmani-Oskooee, M, and J Xu. 2012. “Is There Evidence of the J-Curve in Commodity Trade Between the US and Hong Kong?” The Manchester School 80: 295–320.CrossrefWeb of ScienceGoogle Scholar

  • Banerjee, A, J Dolado, and R Mestre. 1998. “Error-Correction Mechanism Tests in a Single Equation Framework.” Journal of Time Series Analysis 19: 267–285.CrossrefGoogle Scholar

  • Brown, R. L, J Durbin, and J. M Evans. 1975. “Techniques for Testing the Constancy of Regression Relations Over Time.” Journal of the Royal Statistical Society 37(1975): 149–163. Series B.Google Scholar

  • Dell’Anno, R, and F Halicioglu. 2010. “An ARDL Model of Recorded and Unrecorded Economies in Turkey.” Journal of Economic Studies 37: 627–646.CrossrefGoogle Scholar

  • Gylfason, T, and O Risager. 1984. “Does Devaluation Improve the Current Account?” European Economic Review 25: 37–64.CrossrefGoogle Scholar

  • Hajilee, Massomeh, and Omar M Al-Nasser. 2014. “Exchange Rate Volatility and Stock Market Development in Emerging Economies.” Journal of Post Keynesian Economics 37: 163–180.Web of ScienceCrossrefGoogle Scholar

  • Halicioglu, F. 2007. “The J-Curve Dynamics of Turkish Bilateral Trade: A Cointegration Approach.” Journal of Economic Studies 34: 103–119.CrossrefGoogle Scholar

  • Halicioglu, F. 2013. “Dynamics of Obesity in Finland.” Journal of Economic Studies 40: 644–657.CrossrefGoogle Scholar

  • Hameed, A, and S Kanwal. 2009. “Existence of a J-Curve-The Case of Pakistan.” Journal of Economic Cooperation and Development 30(2): 75–98.Google Scholar

  • Hussain, M, and U Bashir. 2012. “Dynamics of Trade Balance and the J-Curve Phenomenon: Evidence from Pakistan.” Journal of Commerce 5(2): 16–31.Google Scholar

  • Khan, Mohsin S. 1974. “Import and Export Demand in Developing Countries.” IMF Staff Papers 21: 678–693.CrossrefGoogle Scholar

  • Magee, S. P. 1973. “Currency Contracts, Pass Through and Devaluation.” Brooking Papers on Economic Activity 1: 303–325.Google Scholar

  • Narayan, P. K. 2005. “The saving and investment nexus for China: Evidence from cointegration tests.” Applied Economics 37: 1979–1990.CrossrefGoogle Scholar

  • Narayan, P. K, S Narayan, B. C Prasad, and A Prasad. 2007. “Export-Led Growth Hypothesis: Evidence from Papua New Guinea and Fiji.” Journal of Economic Studies 34: 341–351.CrossrefGoogle Scholar

  • Panopoulou, E, and N Pittis. 2004. “A Comparison of Autoregressive Distributed Lag and Dynamic OLS Cointegration Estimators in the Case of a Serially Correlated Cointegration Error.” Econometrics Journal 7: 585–617.CrossrefGoogle Scholar

  • Payne, J. E. 2008. “Inflation and Inflation Uncertainty: Evidence from the Caribbean Region.” Journal of Economic Studies 35: 501–511.CrossrefGoogle Scholar

  • Pesaran, M. H, and B Pesaran. 1997. Working with Microfit 4.0, Interactive Econometric Analysis. Camfit Data Ltd.Google Scholar

  • Pesaran, M. H, Y Shin, and R. J Smith. 2001. “Bounds Testing Approaches to the Analysis of Level Relationships.” Journal of Applied Econometrics 16: 289–326.CrossrefGoogle Scholar

  • Rehman, H, and M Afzal. 2003. “J-Curve Phenomenon: An Evidence from Pakistan.” Pakistan Economic and Social Review 41(1): 45–57.Google Scholar

  • Rose, A. K, and J. L Yellen. 1989. “Is There a J-Curve?” Journal of Monetary Economics 24(1): 53–68.CrossrefGoogle Scholar

  • Shahbaz, M. 2009. “On Nominal and Real Devaluations Relation: An Econometric Evidence for Pakistan.” International Journal of Applied Econometrics and Quantitative Studies 9: 86–108.Google Scholar

  • Shahbaz, M, R. U Awan, and K Ahmad. 2011. “The Exchange Value of the Pakistan Rupee & Pakistan Trade Balance: An ARDL Bounds Testing Approach.” The Journal of Developing Areas 44: 69–93.CrossrefGoogle Scholar

  • Tayebi, S. K, and M Yazdani. 2014. “Financial Crisis, Oil Shock and Trade in Asia.” Journal of Economic Studies 41: 601–614.CrossrefGoogle Scholar

About the article

Published Online: 2017-02-15


Citation Information: Global Economy Journal, Volume 13, Issue 1, 20160067, ISSN (Online) 1553-5304, ISSN (Print) 2194-5659, DOI: https://doi.org/10.1515/gej-2016-0067.

Export Citation

© 2017 Walter de Gruyter GmbH, Berlin/Boston.Get Permission

Supplementary Article Materials

Comments (0)

Please log in or register to comment.
Log in