• ISSN: 2010-023X
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2018 Vol.9(2): 88-95 ISSN: 2010-023X
DOI: 10.18178/ijtef.2018.9.2.594

Estimation of the J-Curve: An Empirical Analysis Based on the Trade Balance between Australia and China

Sihong Wu
Abstract—This paper uses an ECM model and cointegration analysis to test 19 industries that are traded between China and Australia using the annual data over the period of 1990 to 2016 to estimate the short-run J-Curve effects and the long-run J-Curve effects. Results show that 13 out of 19 industries can be proved with the short-run J-Curve effects and only 4 industries are proved with the long-run J-Curve effects. This paper finds that due to the time lag effect, the devaluation of Chinese Yuan has little or no long-run effects on the trade balance between China and Australia. Thus, if there is an abnormal fluctuation of exchange rate, the trade balance will not be affected significantly.

Index Terms—Balance of trade, real exchange rate, J-Curve, ECM.

The author is with Management and Commerce in Murdoch University, Western Australia (sihongwu0724@hotmail.com).

[PDF]

Cite: Sihong Wu, "Estimation of the J-Curve: An Empirical Analysis Based on the Trade Balance between Australia and China," International Journal of Trade, Economics and Finance vol.9, no.2, pp. 88-95, 2018.

Copyright © 2008-2018. International Journal of Trade, Economics and Finance. All rights reserved.
E-mail: ijtef@ejournal.net