S-Curve at the Commodity Level: Evidence from US-India Trade |
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Authors: | Mohsen Bahmani-Oskooee Artatrana Ratha |
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Institution: | 1. University of Wisconsin-Milwaukee , Milwaukee, Wisconsin, USA bahmani@uwm.edu;3. St. Cloud State University , St. Cloud, Minnesota, USA |
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Abstract: | The short-run response of the trade balance to changes in the terms of trade or the real exchange rate comes under the heading of the “J-Curve” or the “S-Curve.” While the J-Curve is mostly investigated through regression analysis, the S-Curve is based on the cross-correlation function between the terms of trade and the trade balance. Previous research has shown that in a country where support for any of the two curves is weak, disaggregation of the trade data helps discover more evidence of either curve. This article adds to the literature by considering the experience of India. We demonstrate that once the trade data between India and the United States is disaggregated by commodity, there is evidence of the S-curve in most industries that trade between the two countries. Out of total of 27 industries that constitute about 70% of trade, there are 15 that support the S-Curve. |
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