A nonlinear approach to the U.S.–Australia commodity trade and the J‐curve: Evidence from 123 industries

Mohsen Bahmani‐Oskooee and Hanafiah Harvey
Authors registered in the RePEc Author Service: Mohsen Bahmani-Oskooee

Australian Economic Papers, 2019, vol. 58, issue 3, 318-363

Abstract: The application of nonlinear models and asymmetric analysis have recently proven to yield results that are superior to those of the linear and symmetric analysis. However, the new approaches in testing the J‐curve between Australia and the rest of the world or between Australia and her trading partners such as the United States did not yield any significant outcomes. Suspecting that those results suffer from aggregation bias, we apply new methods to the trade flows of 123 industries that trade between the United States and Australia and give evidence of an asymmetric J‐curve in 28 industries. Furthermore, we find short‐run asymmetric effects of exchange rate changes on the trade balance of almost all studies, short‐run impact asymmetric effects in 27 industries and significant long‐run asymmetric effects in 56 industries. Our findings are industry‐specific.

Date: 2019
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