Estimation of the J-Curve in China
Jaleel Ahmed and
Jing Yang ()
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Jaleel Ahmed: Economics, Massachusetts Institute of Technology, Montreal, Canada
No 67, Economics Study Area Working Papers from East-West Center, Economics Study Area
This paper investigates whether a J-curve can be detected in the time series data on China's bilateral trade with the G-7 countries. It utilizes cointegration and causality tests to ascertain the long-run relatedness, and the short-run dynamics, between the real exchange rate, national income, and the trade balance. There is some evidence that a real depreciation eventually improves the trade balance with some countries. But there is no indication of a negative short-run response which characteristics the J-Curve.
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