Dynamics of the asymmetric S-curve between Pakistan and Japan

Sareer Ahmad (), Javed Iqbal (), Misbah Nosheen () and Mark Wohar
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Sareer Ahmad: Quaid-i-Azam University
Javed Iqbal: Quaid-i-Azam University Islamabad and Fulbright Postdoc Fellow, University of Nebraska at Omaha
Misbah Nosheen: Hazara University Mansehra, Pakistan and Postdoc Fellow, University of Nebraska at Omaha

International Journal of Economic Policy Studies, 2023, vol. 17, issue 2, No 11, 561 pages

Abstract: Abstract The hypothesis of the S-curve concept demonstrates that the correlation between past values of the trade balance and the current exchange rate could be negative, there may also be a positive association between future values of the trade balance and the current exchange rate. Previous studies focusing on the empirical S-curve were thought to have an aggregation bias since they assumed that both appreciation and depreciation have symmetry in cross-correlation with both the current and future value of trade balance. The current study explores the asymmetric S-curve between Pakistan and Japan at the commodities level. Using the S-curve concept, this study classified real exchange rates into two components (appreciation and depreciation) and attempted to determine whether the response of exchange rate movement is symmetric or asymmetric on the trade balance. The findings come up with significant support in favor of the "asymmetric S-curve" in eleven, out of fifteen industries. The findings are crucial in analyzing the behavior of the exchange rate appreciation and deprecation with the past and future values of trade balance at the industry level.

Keywords: Asymmetric; S-Curve; Appreciation; Cross-correlation; Depreciation; Exchange rate (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s42495-023-00112-0

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