US trade deficit, a reality check: New evidence incorporating asymmetric and non‐linear effects of exchange rate dynamics

Nasir, Muhammad; Leung, Mary

doi:10.1111/twec.12986

Cited by 13 publications

(3 citation statements)

References 102 publications

(126 reference statements)

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“…6 6 For some other application of these models see Halicioglu (2007), Gogas and Pragidis (2015), Durmaz (2015), Baghestani and Kherfi (2015), Al‐Shayeb and Hatemi‐J. (2016), Lima et al (2016), Nusair (2012, 2016), Aftab et al (2017), Arize et al (2017), Gregoriou (2017), Lucarelli et al (2018), Istiak and Alam (2019), Hajilee and Niroomand (2019), Olaniyi (2019), Baek (2020), Bahmani‐Oskooee (2020), Bahmani‐Oskooee and Nasir (2020), Bahmani‐Oskooee et al (2021), and Nasir and Leung (2021). …”

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confidence: 99%

Is there J‐curve effect in the US Service Trade? Evidence from asymmetric analysis

Bahmani‐Oskooee

Karamelikli

2022

Int. J Fin Econ

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The J‐curve hypothesis asserts that a depreciation could worsen the trade balance in the short run but improves it in the long run. In testing the hypothesis, almost all previous studies used trade data in goods only. We add to this literature by considering the US trade in insurance and financial services with each of its nine trading partners. Using quarterly data over the period 2003Q1–2019Q4, when we estimated a linear model, we found limited support for the J‐curve effect. However, when we estimated a nonlinear model to assess the possibility of asymmetric response of a service trade to exchange rate changes, we found much more support for the hypothesis. Precisely, we found support for the asymmetric J‐curve in the US insurance (finance) trade with Australia, Belgium, France, and Korea (Australia, Germany) and asymmetric inverse J‐curve in the US insurance (finance) trade with Germany, Italy, and United Kingdom (Belgium, Canada).

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confidence: 99%

Is there J‐curve effect in the US Service Trade? Evidence from asymmetric analysis

Bahmani‐Oskooee

Karamelikli

2022

Int. J Fin Econ

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“…It seems extremely difficult to give a conclusive answer to this question, however it can be noted that the factors generating domestic demand, i.e., private consumption, government consumption and investment were significantly influencing the current account balance in all analysed models, including the group of developed countries. In addition, many studies (e.g., (Nasir and Leung, 2020) indicate that in the case of the United States, domestic factors are important; however, the policies of trading partners, mainly China, are not insignificant in shaping the U.S. trade balance.…”

Section: Discussionmentioning

confidence: 99%

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Twarowska-Mol¹,

Twarowska-Ratajczak²

2021

ERSJ

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Purpose:The aim of the paper is to identify and assess the impact of the determinants of global payment imbalances in 2000-2019. Design/Methodology/Approach: The study used the desk research method, including critical analysis of the recent literature and econometric methods of data analysis. The assessment of the evolution of global payment imbalances was carried out using the index of global payment imbalances (GI), while regression analysis based on panel data was used to assess the impact of factors influencing payment imbalances. Findings: The research proves that the factors significantly influenced the current account balances (CAB) in the analyzed countries were, real effective exchange rate, GDP growth, household consumption and government consumption, investment, government budget balance, terms of trade, and crude oil trade balance. Practical Implications: The conducted analyses allowed to formulate several recommendations for economic policy. China's exchange rate policy ceased to be the key factor generating global payment imbalances. Moreover, the change in China's economic model of reducing the role of external drivers of economic growth (export demand) and increasing the role of internal drivers (domestic demand) contributes to reducing China's external imbalances. Whereas, the sources of the U.S. current account deficit are particularly internal factors (domestic absorption). The government budget balance is one of the most important factors determining the CAB. Reducing government spending, can become an effective instrument to improve the current account balance. In addition, the balance of crude oil trade is a factor that has a large impact on the CAB. The energy transition of countries towards renewable sources can reduce global payment imbalances. Originality/value: The results contribute to the discussion on the determinants of the global payment imbalances. In this approach, a comprehensive assessment for all countries and by group is possible.

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“…Similarly, studies have reported mixed findings when examining asymmetric (nonlinear) relationships between the two variables. For instance, Nasir and Leung [ 15 ] found an asymmetric J-curve effect of devaluation on the USA's current account. However, Nathaniel [ 16 ] documented that devaluation did not boost competitiveness in Nigeria.…”

Section: Introductionmentioning

confidence: 99%

Relative responses of trade in goods and services to currency devaluation: Evidence from Ethiopia

Dachito Chigeto

2024

Heliyon

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US trade deficit, a reality check: New evidence incorporating asymmetric and non‐linear effects of exchange rate dynamics

Abstract: This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Cited by 13 publications

References 102 publications

Is there J‐curve effect in the US Service Trade? Evidence from asymmetric analysis

Is there J‐curve effect in the US Service Trade? Evidence from asymmetric analysis

Analysis of Factors Determining Global Payment Imbalances in 2000-2019

Relative responses of trade in goods and services to currency devaluation: Evidence from Ethiopia

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