Is There a Brazilian J-Curve?

We show that Marshall-Lerner condition holds for Brazilian trade balance, and discard a J-curve in the short run. We present these results using impulse-response functions in a variety of (linear and nonlinear) models, including Markov-switching, vector error-correction models.

Another View of the J-Curve

We use a two-good dynamic optimizing small open economy model to provide a new explanation of the J-Curve phenomenon in terms of habit persistence in consumption and sluggishness in capital adjustment. The results differ markedly depending on the permanence or temporary nature of the relative price change. A short-lived terms of trade worsening may lead to a once-for-all decrease in the marginal utility of wealth and to higher steady-state values of the habitual standard of living, the real expense, and the net foreign assets through the combination of intertemporal speculation, inertia, and hysteresis effects. Investment and real expense folow non-monotonic transitional paths and current account dynamics are driven by new forces. In accordance with recent empirical results, investment is procyclical, trade balance deteriorates initially, net foreign assets adjustment exhibits a J-Curve, and the current account surplus phase is associated with a fall in real income.Current account; Habit Formation; Temporary Shock; J-Curve

Asian Financial Crisis and the J-Curve: Evidence from South Korea

Using an error correction version of an autoregressive distributed lag model, we investigate the dynamics of the Korean J-Curve against her eight trading partners. The strict version of the J-Curve is observed with a few major Korean trading partners, such as the U.S. and Indonesia. The estimation results from the Trade Balance Model and the Error Correction Model confirm that, after a depreciation of the Korean won, there has been a long-run adjustment toward the improvement of Korean trade balance against most trading partners. The findings are consistent over different sample periods, including before and after the financial crisis in 1997, and with different trading partners. After the Asian financial crisis, we find that the J-Curve relationship with Korean trading partners has become much more apparent than it was before the crisis.Bilateral Trade, J-Curve, Currency Crisis

J curve for abatement with transboundary pollution

In this note an alternative framework to Selden and Song's (1995) work is proposed in order to clarify some of their results and verify whether the relationship between pollution abatement and national income can be drawn as a J curve when there is more than one country involved. As Selden and Song do, pollution is considered as a flow externality. Their model is extended to a two country case which requires the use of differential games. The optimisation problem is decomposed into two stages, the pollution abatement and the accumulation problem. A J curve for pollution abatement is replicated and a static comparative analysis confirms that the smaller the rate of discount and/or the less polluting a technology is, the higher the stock of capital, current expenditure and pollution abatement will be at the steady state.differential games

Estimation of the J-Curve in China

This paper investigates whether a J-curve can be detected in the time series data on China's bilateral trade with the G-7 countries. It utilizes cointegration and causality tests to ascertain the long-run relatedness, and the short-run dynamics, between the real exchange rate, national income, and the trade balance. There is some evidence that a real depreciation eventually improves the trade balance with some countries. But there is no indication of a negative short-run response which characteristics the J-Curve.

Exchange Rate and Trade Balance: J-curve Effect

This paper shows that exchange rate depreciation in Serbia improves trade balance in the long run, while giving rise to a J-curve effect in the short run. These results add to the already existent empirical evidence for a diverse set of other economies. Both Johansen’s and autoregressive distributed lag approach are respectively used giving similar long-run estimates showing that real depreciation improves trade balance. Corresponding errorcorrection models as well as impulse response functions indicate that, following currency depreciation, trade balance first deteriorates before it later improves, i.e. exhibiting the J-curve pattern. These results are relevant for policy making both in Serbia and in a number of other emerging Europe countries as they face major current account adjustments after BoP crises of 2009.Exchange rate and trade balance, J-curve, Cointegration, Autoregressive distributed lag approach.

Bilateral J-Curve Between Thailand and Her Trading Partners

Previous studies that tested the J-Curve phenomenon, employed aggregate trade data. More recent studies however, have used bilateral data in testing the phenomenon. They have all concentrated investigating the J-Curve between the U.S. and her five largest trading partners. In this paper we test the J-Curve phenomenon between Thailand and her large trading partners that include Germany, Japan, Singapore, U.K and the U.S. Using quarterly data over 1973I-1997IV period and cointegration analysis we find evidence of the J-Curve at least in the cases of U.S. and Japan.

Making sense of the J-curve: Capital utilisation, output, and total factor productivity in Polish industry 1990 - 1993

The economies of Central and Eastern Europe are undergoing a period of rapid structural change. The general pattern confirms to the J-curve anticipated by several observers at the start of transition. This paper conceptualises the J-curve as the result of a combination of two factors. First, real energy price increases render parts of the capital stock obsolete, due to complementarity between capital and energy in the short run. Second, demand shifts and to a lesser extent efficiency improvements induced by increases in competition cause dramatic changes in total factor productivity. The paper shows for the case of Polish industry that 43 per cent of the capital stock was rendered obsolete over the 1990-1993 period. Total factor productivity fell by 11 per cent in 1990 but had increased to 17 per cent above the 1989 level by 1993. As the capital stock is gradually rebuilt, improvements in efficiency will guarantee an output level higher than before the start of transition.capital ultilisation,efficiency,J-curve,Poland

Exchange rate policy and trade balance. A cointegration analysis of the argentine experience since 1962.

Using multivariate cointegration tests for non-stationary data and vector error correction models, this paper examines the determinants of trade balance for Argentina over the last forty to fifty years. Our investigation confirms the existence of long-run relationships among trade balance, Real Exchange Rate (RER) and foreign and domestic incomes for Argentina during different real exchange rate management policies. Based on the estimations, the Marshall-Lerner condition is examined and, by means of impulse response functions, we trace the effect of a one-time shock to the RER on the trade balance checking the J-curve pattern.Argentina; Marshall-Lerner; J-Curve; cointegration and impulse response analysis