Abstract
This article examines whether the trade balance of two dynamic export-oriented economies, Korea and Taiwan, exhibits a J-curve effect. The article studies both their bilateral and aggregate trade balance during the flexible exchange-rate era. When the exchange-rate coefficients are unconstrained, we demonstrate that no J-curve effect exists either for bilateral or aggregate trade balances. Several robustness checks confirm the validity of our findings. When a polynomial-distribute lag structure is imposed on exchange-rate coefficients, a J-curve is evident in some cases. The article discusses possible explanations for the general lack of evidence in favor of a J-curve, including the response of a small country's trade balance to exchange-rate changes.
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Hsing, HM., Savvides, A. Does a J-curve exist for Korea and Taiwan?. Open Econ Rev 7, 127–145 (1996). https://doi.org/10.1007/BF01891900
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DOI: https://doi.org/10.1007/BF01891900