The J-curve: Malaysia versus her major trading partners

Mohsen Bahmani-Oskooee, Hanafiah Harvey

Research output: Contribution to journalArticle

24 Scopus citations

Abstract

Currency depreciation is said to worsen the trade balance before improving it, hence the J-curve phenomenon. Since introduction of cointegration and error-correction modelling, researchers have tried to distinguish the short- run effects of currency depreciation from its long-run effects. A few studies that have investigated the experience of Malaysia, have relied upon aggregate trade data and have found no strong support for a significant relation between the real value of the ringgit and the Malaysian trade balance. In this article, we disaggregate the data by country and consider Malaysia's bilateral trade balance with her 14 largest trading partners. Using bound testing approach to cointegration and error-correction modelling, we provide some support for the J-curve hypothesis.

Original languageEnglish (US)
Pages (from-to)1067-1076
Number of pages10
JournalApplied Economics
Volume42
Issue number9
DOIs
StatePublished - Apr 1 2010

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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