Bangladesh’s trade partners and the J-curve: an asymmetry analysis

Bahmani‐Oskooee, Mohsen; Rahman, Mir Obaidur; Kashem, Mohammad Abdul

doi:10.1080/17520843.2018.1534873

Cited by 7 publications

(10 citation statements)

References 27 publications

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“…Thus, their findings strongly indicate that NARDL is more superior than the conventional ARDL method in providing support for J-curve phenomenon. Many other papers reported the same results, which can be instanced as Bahmani-Oskooee and Baek (2018) , Bahmani-Oskooee et al., 2018a , Bahmani-Oskooee et al., 2018b , Ari et al. (2019) , Bahmani-Oskooee and Fariditavana, 2020 , Bahmani-Oskooee et al., 2019a , Bahmani-Oskooee et al., 2019b , Bahmani-Oskooee and Nasir (2019) , Bahmani-Oskooee and Fariditavana (2020) , and Bahmani-Oskooee and Nouira (2020) .…”

Section: Literature Reviewmentioning

confidence: 58%

“…The cases with J-curve effect are summarized in Table 1 . Regarding the bilateral exchange rate model, the J-curve effect caused by POS (i.e., depreciation of VND) is witnessed in the cases of France, Greece, Portugal, Romania, Spain and Sweden, as evidenced by the significant negative or insignificant short-run coefficients of POS variables combined with their corresponding positive long-run ones ( Rose and Yellen, 1989 ; Bahmani-Oskooee and Fariditavana, 2015 ; Bahmani-Oskooee et al., 2018a , Bahmani-Oskooee et al., 2018b ). Among the aforementioned countries, France is the third biggest EU trading partner of Vietnam during the 2000Q1–2018Q1 period.…”

Section: Resultsmentioning

confidence: 99%

“…The J-curve effect can be identified if the short-run coefficients of either POS or NEG variables in Eqs. (3) and (5) are negative or statistically insignificant while their long-run counterparts are positive ( Rose and Yellen, 1989 ; Bahmani-Oskooee and Fariditavana, 2015 ; Bahmani-Oskooee et al., 2018a , Bahmani-Oskooee et al., 2018b ).…”

Section: Methodsmentioning

confidence: 95%

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Asymmetric impact of exchange rate on trade between Vietnam and each of EU-27 countries and the UK: evidence from nonlinear ARDL and the role of vehicle currency

Bao

2021

Heliyon

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The relationship between exchange rate and trade balance has been spotlighted in the past several decades and thus examined by manifold research. The findings, however, lack of consensus despite the intensive efforts in investigating the role of exchange rate as an important determinant of trade balance in various countries. Although the existing papers are abundant, most of them neglect the role of vehicle currency. Besides, few articles are dedicated to Vietnam, and none has inspected the exchange rate-trade balance nexus between Vietnam and the EU. This study is the first to scrutinize how bilateral exchange rates, together with vehicle currency exchange rate, asymmetrically impact Vietnam's bilateral trade balance with respect to EU-27 countries and the UK. The NARDL estimation results strongly acknowledge the importance of USD as vehicle currency when more significant short-run and long-run coefficients are found. Accordingly, this article can provide some useful implications for policy-makers, especially when Vietnam was first labelled currency manipulator by the USA in December 2020. Particularly, USD/VND movement can affect not only Vietnam-USA but also Vietnam-EU and Vietnam-UK trade balance. In addition, VND appreciation against USD seems beneficial to Vietnam's bilateral trade with the EU plus the UK.

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Section: Literature Reviewmentioning

confidence: 58%

Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 95%

See 1 more Smart Citation

Asymmetric impact of exchange rate on trade between Vietnam and each of EU-27 countries and the UK: evidence from nonlinear ARDL and the role of vehicle currency

Bao

2021

Heliyon

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“…Nevertheless, in rather later evidence on the Austrian economy Darne and Hoarau (2007) could not find the tendency of PPP to hold in Australia. In the recent evidence from bilateral trade balances of Bangladesh, Bahmani-Oskooee et al (2017) also reported mixed results on the presence of the J-curve, though there was strong support for the presence of J-curve in the trade balance with the US. Similarly, in the most recent evidence, focussing on US–Mexico bilateral trade, Bahmani-Oskooee et al (2018) reported significant evidence of short-run and long-run asymmetric effects of exchange rate changes.…”

Section: Nexus Exchange Rate Misalignment and Trade Imbalancementioning

confidence: 99%

“…9. Initial deterioration and then long-term improvement of trade balance due to exchange rate depreciation forming a J-curve response (please see Bahmani-Oskooee and Ratha, 2004; Bahmani-Oskooee and Hegerty, 2010; Bahmani-Oskooee et al , 2013 or most recently Bahmani-Oskooee and Saha, 2017; Bahmani-Oskooee et al , 2017). …”

Section: Notesmentioning

confidence: 99%

An inquiry into exchange rate misalignments as a cause of major global trade imbalances

Nasir

Jackson

2019

JES

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Purpose In the context of debate on competitive devaluation and trade imbalances, the purpose of this paper is to investigate the role of exchange rate misalignment as a determinant of trade imbalances in selected major trade surplus (Germany, China, Japan, Russia and KSA) and major trade deficit countries (USA, UK, France, India and Turkey). Design/methodology/approach The authors used a structural vector auto-regressive model on data from ten countries with the highest trade deficit and surplus. The period of analysis is from 2000 Q1 to 2016 Q1. Findings The key findings suggest that although exchange rate misalignment from equilibrium may have some implications for the current account balance for surplus and deficit countries, the effects observed were rather very mild and transitory. There was a heterogeneity in the response of the current account position to exchange rate misalignment in each country, concomitantly; the exchange rate misalignment shall not be seen as the sole responsible factor in the debate on global trade imbalances. Research limitations/implications The research has profound implications in terms of exploring the notion of competitive devaluation and exchange rate misalignment as a cause of major global trade imbalances. Practical implications This study has important practical implications for the trade policy of major economies in the world. These are twofold. First, this study has analysed and reported on the degree of misalignment of exchange from its equilibrium values in the major trade surplus and deficit countries. Second, it has investigated the implications of any misalignment for the trade balance or respective economies. Social implications There are important social implications as the notion of competitive devaluation and exchange rate–trade balance nexus has been heavily politicised. This study provides an empirical insight and an answer to these claims which have social and political implications. Originality/value There is a significant element of originality and contribution to the existing body of knowledge on the subject. In the context of debate on competitive devaluation this is the first study which has investigated whether the exchange rate has been misaligned from its equilibrium values (competitive devaluation) and whether there is some nexus between the real exchange rate misalignment and trade imbalances in under-analysis economies.

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Cultural distance and bilateral trade: A transitional economy perspective

Mostafiz,

Akter,

Rahman

2024

Bus Strat Dev

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Cultural differences represent significant trade barriers between transitional economies and their trading partners, which has been overlooked in recent studies. This paper investigates the effect of cultural distance (CD) on bilateral trade from Bangladesh. We conceptualize a research model by employing the extended gravity model as a theoretical base, where we amplify the theory by proposing that linguistic distance (LD) as a part of cultural distance has a profound effect on bilateral trade based on bilateral trade data from 1995 to 2019 and Hofstede's culture indices between Bangladesh and 157 trading partner countries. Using a pseudo‐poisson maximum likelihood model, we find that cultural distance has a significant and negative impact on Bangladesh's trade, with a significance level of 1%. Our empirical results indicate that one unit increase in cultural distance decreases trade by 40.84% and cultural distance has a greater impact on Bangladesh's exports than on its imports. Findings also reveal that the effect is substantial with high‐income nations than with low‐income nations, and for manufacturing products than primary products trade. Further, this study suggests that in addition to cultural distance (CD), linguistic distance (LD) from trading partners has a tantamount effect on bilateral trade, which is significant at 1%. Theoretically, this study suggests that linguistic distance (LD) should be added on gravity model for analyzing effects of cultural distance on bilateral and multilateral trade. Practically, this study contributes by providing valuable insights to policymakers to pay attention to cultural differences, especially during these economic transition periods to increase bilateral trade.

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Bangladesh’s trade partners and the J-curve: an asymmetry analysis

Cited by 7 publications

References 27 publications

Asymmetric impact of exchange rate on trade between Vietnam and each of EU-27 countries and the UK: evidence from nonlinear ARDL and the role of vehicle currency

Asymmetric impact of exchange rate on trade between Vietnam and each of EU-27 countries and the UK: evidence from nonlinear ARDL and the role of vehicle currency

An inquiry into exchange rate misalignments as a cause of major global trade imbalances

Cultural distance and bilateral trade: A transitional economy perspective

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