THE J-CURVE AND KOREA’S BILATERAL TRADE: THE ROLE OF CRUDE OIL PRICES

Jiangqin Xu () and Jungho Baek
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Jiangqin Xu: Business School, Hubei University, Hubei, China

The Singapore Economic Review (SER), 2024, vol. 69, issue 01, 203-226

Abstract: Although oil prices likely influence the trade balance via macroeconomy channels (i.e. exchange rates and income), less widely recognized is the possibility of such an effect in investigating the hypothesis of a J-Curve. Thus, the primary thrust of this paper is to investigate the effect of oil prices on the J-Curve using bilateral trade data between Korea and her 14 largest partners. We uncover that the price of crude oil is indeed important in affecting the Korean trade balance and thus further validity evidence of the J-Curve. We further discover that incorporating exchange rate asymmetry provides more evidence supporting the J-Curve in the Korean trade balance.

Keywords: Balance of trade; exchange rate; J-curve; Korea; oil prices (search for similar items in EconPapers)
JEL-codes: C22 F14 Q43 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0217590820500381

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