Bangladesh’s trade partners and the J-curve: an asymmetry analysis |
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Authors: | Mohsen Bahmani-Oskooee Mir Obaidur Rahman Mohammad Abdul Kashem |
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Institution: | 1. The Center for Research on International Economics, Department of Economics, The University of Wisconsinin-Milwaukee, Milwaukee, WI, USA;2. Department of Economics, School of Business and Economics, United International University, Dhaka, Bangladesh;3. Bangladesh Bank, Dhaka, Bangladesh |
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Abstract: | Separating currency appreciations from depreciations and using non-linear models in recent literature have improved discovering significant link between the trade balance and the exchange rate. We add to this growing literature by considering the experience of Bangladesh with 11 trading partners. When a linear model was used, support for the J-curve effect was present only with one small partner. However, when a non-linear model was used, support increased to three countries including the largest partner, the United States, which accounts for more than 12% of Bangladesh’s trade. Furthermore, the non-linear models supported short-run asymmetry adjustment as well as short-run asymmetry effects of exchange rate changes in most cases. However, long-run asymmetric effects were limited to a few. |
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Keywords: | Bangladesh Taka J-curve Asymmetry Analysis 11 Partners |
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