Asian Financial Crisis and Korean Trade Dynamics

Artatrana Ratha () and Eungmin Kang ()
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Eungmin Kang: Department of Economics, St. Cloud State University

No 2012-23, Working Papers from Saint Cloud State University, Department of Economics

Abstract: Since the Asian financial crisis in 1997, Korean international trade has gone up substantially in both volume and trade balances. The improvement is largely due to an expansion of international markets through various bilateral trade agreements and the structural changes in Korean exchange rates. This paper investigates the exchange rate – trade balance dynamics, popularly known as the J-curve phenomenon. Employing the Bounds-Testing approach to cointegration and error-correction modeling on Korean bilateral trade for the pre- and post- Asian crisis periods, the study finds that support for the strict version of the J-curves has been fading after the crisis. The weaker version of J-curve is generally supported in both pre- and post-crisis sample periods. There exists a long-run relationship among the Korean exchange rates, domestic income, foreign income, and Korean trading balances.

Keywords: Asian Financial Crisis; Asian Currency Crisis; J-Curve; exchange rate; trade balance; current account adjustment (search for similar items in EconPapers)
JEL-codes: F14 F32 F41 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-sea
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Related works:
Journal Article: ASIAN FINANCIAL CRISIS AND KOREAN TRADE DYNAMICS (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:scs:wpaper:1223

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