German-US Commodity Trade: Is there a J-Curve Effect?

Mohsen Bahmani-Oskooee and Masoomeh Hajilee

Applied Economics Quarterly (formerly: Konjunkturpolitik), 2012, vol. 58, issue 4, 327-353

Abstract: The short-run and long-run effects of currency depreciation on the trade balance of Germany have been investigated by several studies. Studies that have used aggregate trade data between Germany and the rest of the world have been said to suffer from aggregation bias. Those that disaggregated their trade data by trading partners and looked at the response of bilateral trade found neither short-run nor long-run effects. In this paper, we disaggregate bilateral trade data between Germany and the US by commodity and consider the response of the trade balance of 131 industries to real depreciations of the euro. We find that while in the short run, 91 industries respond to the depreciation of euro, these short-run effects last into the long run in 59 industries. Furthermore, the J-curve pattern was discovered in 31 cases.

Keywords: J-curve; industry data; bounds testing; Germany; the United States (search for similar items in EconPapers)
JEL-codes: F31 (search for similar items in EconPapers)
Date: 2012
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