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Economic Change and Restructuring

, Volume 47, Issue 3, pp 227–250 | Cite as

Is there J-Curve effect in the commodity trade between Korea and rest of the world?

  • Mohsen Bahmani-OskooeeEmail author
  • Ruixin Zhang
Article

Abstract

Previous studies that investigated the short-run and long-run effects of depreciation of the Korean won on the Korean trade balance with the rest of the world have not been able to discover significant effects. Suspecting that these studies suffer from aggregation bias, we disaggregate Korean trade flows with the rest of the world by commodity and consider the response of trade balances of 148 industries to changes in the real effective exchange rate of the won. We find that in the short run the trade balance of 91 industries are affected by exchange rate changes. However, the short-run effects last into favorable long-run only in 26 industries, a unique finding that is absent from the literature.

Keywords

J-Curve Industry data Korea The world 

JEL Classification

F31 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.The Center for Research on International Economics, The Department of EconomicsUniversity of Wisconsin–MilwaukeeMilwaukeeUSA

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