Novel evidence on the asymmetric J‐curve in the commodity trade between Korea and China: evidence from 75 industries

Shengliang Zhao and Lixin Liu

Asian-Pacific Economic Literature, 2023, vol. 37, issue 2, 142-164

Abstract: The real bilateral exchange rate between Korean won and Chinese yuan is a crucial factor in balancing trade between Korea and China and has implications for both academics and policymakers. Prior research using symmetry hypotheses on bilateral trade and its heterogeneity among industries is limited. This study re‐examines the symmetric and asymmetric J‐curve phenomenon between them, employing the linear and nonlinear autoregressive distributed lag models. It considered the January 2008–June 2022 trade balance of 75 industries. This analysis shows support for the symmetric (asymmetric) J‐curve in 4 of 12 industries from the linear (nonlinear) model, accounting for 58.55% of the total trade between Korea and China. Furthermore, short‐ and long‐run asymmetries are detected in most industries, affirming the suitability of the nonlinear ARDL method.

Date: 2023
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https://doi.org/10.1111/apel.12397

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