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Öğe Asymmetric effects of exchange rate volatility on trade flows: evidence from G7(Springernature, 2023) Bahmani-Oskooee, Mohsen; Karamelikli, Huseyin; Niroomand, FarhangCurrent trend in applied research points at application of Shin et al.'s (2014) nonlinear ARDL approach to asymmetric error-correction modeling and asymmetric cointegration. Two studies in the literature have applied these approaches to assess the short-run and long-run asymmetric effects of exchange rate volatility on aggregate exports and imports of Asian and African countries, respectively. We add to this new literature by considering the experiences of G7 countries. We find that trade flows of almost all countries are affected by volatility asymmetrically in the short run. In the long run, while French and Italian exports are boosted by increased volatility, German exports are hurt. On the other hand, decreased volatility reduces French and Italian exports. As for G7 imports, increased exchange rate volatility hurts imports of Canada, Germany, France, Italy, and the U.K. in the long run and decreased volatility boosts their imports.Öğe Asymmetric J-curve: evidence from UK-German commodity trade(Springer, 2021) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinPrevious studies that have investigated the J-curve phenomenon between the UK and its largest trading partner from the European Union (EU), Germany, used aggregate bilateral trade data and found no support for the phenomenon. In this paper, we disaggregate the trade data by industry and investigate the symmetric as well as asymmetric J-curve hypothesis for each of the 95 2-digit industries that trade between the two countries. We found support for the symmetric J-curve effect in 12 industries, but support for the asymmetric J-curve effect 21 industries. Since the asymmetric approach required separating pound depreciation from appreciation, the approach also allowed us to identify industries that could benefit or be hurt from pound depreciation and those that could be hurt or benefit from pound appreciation.Öğe China's trade in services and role of the exchange rate: An asymmetric analysis(Elsevier, 2022) Xu, Jia; Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinNearly all studies in the literature have assessed the impact of exchange rate changes on trade flows for goods. Service industries, however, have not received much attention. Two studies have assessed the effects of exchange rate changes on U.S. service trade with its partners. We add to this literature with a new study that assesses the symmetric and asymmetric effects of changes in the real effective rate of the yuan on China's trade in 11 service industries with the world. While we find short-run effects on imports and exports for almost all service categories, short-run effects last into long-run asymmetric effects in six Chinese importing service industries and eight Chinese exporting service industries. (c) 2022 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.Öğe China?s trade in services and asymmetric J-curve(Elsevier, 2022) Xu, Jia; Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinAlmost all studies that tested the J-curve phenomenon, used trade data in only goods. Trade in service has received no attention until recently when one study tested the symmetric and asymmetric J-curve hypothesis using financial and insurance service data between the U.S. and its major partners. In this paper we add to this new literature by testing the symmetric and asymmetric J-curve effect using China's service trade with rest of the world. We find support for the J-curve effect in six out of 12 service industries, symmetric in some and asymmetric in some others.(c) 2022 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.Öğe Do currency manipulations hurt US bilateral trade balance?(Springer Heidelberg, 2023) Aftab, Muhammad; Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinCurrency manipulations, the intentional intervention in the foreign exchange market by a country's government or central bank, have been a contentious issue in international trade. However, empirical evidence on the matter is scarce. This study aims to fill this gap by investigating the effect of currency manipulations on the US bilateral trade balance with its major trading partners over a long-term period of 2000Q4 to 2020Q2. By using a novel currency manipulation index based on the US Treasury-defined variables and a combination of time series and panel cointegration approaches, this study uses a dataset of 21 major trading partners of the US. The analysis shows that currency manipulations have a statistically significant negative effect on the US bilateral trade balance with some country-level heterogeneity. The study provides new insights on the role of currency manipulations in international trade and implies that the findings have significant policy implications. By providing evidence of the detrimental effect of currency manipulations on trade balance, this study supports the argument for the need of international agreements and regulations to discourage such practices and promote fairness in global trade.Öğe Estimating a bilateral J-curve between the UK and the Euro area: An asymmetric analysis(Wiley, 2021) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinThe J-curve outlines the path of movement in the trade balance after a currency is devalued or depreciated, deteriorating in the short run but improving in the long run. One study in this journal investigated the concept between the UK and each of its 10 large partners from the EU. The study found support for the J-curve effect in the UK trade balance with Belgium, Germany, France, Italy and Netherlands. However, the findings were based on sign misinterpretation. If correctly interpreted, the findings actually support the inverse J-curve, i.e., long-run deterioration in the bilateral trade balances. The results were based on using the linear ARDL approach. We revisit the issue and use the Nonlinear ARDL approach. We find support for the asymmetric J-curve effect in the bilateral trade balance between the UK and France, Greece, Portugal and Spain and an asymmetric inverse J-curve in the case of Finland.Öğe Exchange rate volatility and Japan-US commodity trade: An asymmetry analysis(Wiley, 2019) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinExchange rate volatility is said to affect trade flows in either direction. When increased volatility is separated from decreased volatility, asymmetric analysis reveals even more support for the fact that both increased volatility and decreased volatility affect trade flows in either direction. We add to this new literature by considering 57 industries that trade between Japan and the US. In addition to providing evidence of asymmetric response of their trade flows to a measure of exchange rate volatility, our approach identifies industries that could benefit from increased exchange rate volatility and those that could be hurt. Similarly, we identify industries that could benefit from decreased volatility and those that could be hurt. The overall conclusion is the adverse effects of dollar-yen volatility on the trade between the two countries.Öğe Exchange Rate Volatility and Turkey-US Commodity Trade: An Asymmetry Analysis(Economic Issues Education Fund, 2020) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinIn this paper we assess the symmetric and asymmetric effects of lira-dollar volatility on 56 2-digit industries that trade between Turkey and the US When a linear model was estimated, which assumes the effects to be symmetric, we found short-run effects of volatility on 23 Turkish exporting industries and 31 Turkish importing industries. Short-run effects lasted into the long-run in 6 exporting and 18 importing industries. However, when a nonlinear model was estimated, we found short-run effects in 41 exporting and 42 importing industries which were asymmetric in all industries. Short-run effects translated into asymmetric long-run effects in 45 exporting and 22 importing industries.Öğe Exchange rate volatility and Turkish-German commodity trade: an asymmetry analysis(Emerald Group Publishing Ltd, 2021) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinPurpose The purpose of this paper is to show that in some industries the linear model may not reveal any significance link between exchange rate volatility and trade flows but once nonlinear adjustment of exchange rate volatility is introduced, the nonlinear model reveals significant link. Design/methodology/approach This paper uses the linear ARDL approach of Pesaran et al. (2001) and the nonlinear ARDL approach of Shin et al. (2014) to assess asymmetric effects of exchange rate volatility on trade flows between Germany and Turkey. Findings This paper consider the experiences of 75 2-digit industries that trade between Turkey and Germany. When the study assumed the effects of volatility to be symmetric, the study found short-run effects in 31 (30) Turkish (German) exporting industries that lasted into the long run in only 10 (13) Turkish (German) exporting industries. However, when the study assumed asymmetric effects and relied upon a nonlinear model, the study found short-run asymmetric effects of volatility on exports of 55 (56) Turkish (German) industries. Short-run asymmetric effects lasted into long-run asymmetric effects in 10 (25) Turkish (German) exporting industries. All in all, we found that almost 25% of trade is hurt by exchange rate volatility. Originality/value This is the first paper that assesses the possibility of asymmetric effects of exchange rate volatility on German-Turkish commodity trade.Öğe Financial and insurance services trade and role of the exchange rate: An asymmetric analysis(Elsevier, 2021) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinAlmost all studies in the trade literature have concentrated on the trade in goods. Recently, a study considered trade in two service industries (insurance and financial) between the U.S. and six of her trading partners and concluded that exchange rate changes have no significant effects on the U.S. service trade. Could such a finding be due to assuming the effects to be symmetric? We provide an affirmative answer by arguing and demonstrating that the effects of exchange rate on service trade could be asymmetric, which requires using nonlinear models. Once we estimate the nonlinear models, indeed we show that dollar depreciation and dollar appreciation have significant short-run and long-run effects on the U.S. inpayments from and outpayments to most of its partners in the two service industries. We attribute our new discoveries to the nonlinear adjustment of the real exchange rate. (C) 2021 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.Öğe Is there a J-curve effect in Tunisia's bilateral trade with her partners? New evidence from asymmetry analysis(Springer, 2019) Bahmani-Oskooee, Mohsen; Amor, Thouraya Hadj; Harvey, Hanafiah; Karamelikli, HuseyinRecently a new direction on the relation between the exchange rate and the trade balance has emerged where the emphasis is on application of asymmetry analysis and nonlinear models. Whereas, the linear models have failed to provide strong support for the J-curve effect, the nonlinear models have proved to be fruitful. We add to this later literature by estimating bilateral trade balance models of Tunisia with her six large partners. The results reveal that exchange rate changes do have short-run asymmetric effects in all six models, short-run adjustment asymmetric effects in three models, and significant long-run asymmetric effects in three models.Öğe Is there J-curve effect in the US Service Trade? Evidence from asymmetric analysis(Wiley, 2023) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinThe J-curve hypothesis asserts that a depreciation could worsen the trade balance in the short run but improves it in the long run. In testing the hypothesis, almost all previous studies used trade data in goods only. We add to this literature by considering the US trade in insurance and financial services with each of its nine trading partners. Using quarterly data over the period 2003Q1-2019Q4, when we estimated a linear model, we found limited support for the J-curve effect. However, when we estimated a nonlinear model to assess the possibility of asymmetric response of a service trade to exchange rate changes, we found much more support for the hypothesis. Precisely, we found support for the asymmetric J-curve in the US insurance (finance) trade with Australia, Belgium, France, and Korea (Australia, Germany) and asymmetric inverse J-curve in the US insurance (finance) trade with Germany, Italy, and United Kingdom (Belgium, Canada).Öğe Japan-US trade balance at commodity level and asymmetric effects of Yen-Dollar rate(Elsevier Science Bv, 2018) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinPrevious research that applied the new nonlinear methods to Japan's trade balance with the rest of the world or between Japan and its major partner, the U.S., could not discover any asymmetric effects of exchange rate changes. Suspecting that aggregation bias could play a role, in this paper we concentrate on the Japan-U.S. trade balance but disaggregate their trade flows by commodity and consider the response of the trade balance of each of the 56 industries to industry-specific real exchange rate changes. We find short-run asymmetric effects of exchange rate changes in 44 industries and short-run impact asymmetric effects in 19 industries. However, the short-run effects lasted into long-run asymmetric effects in 18 industries. Small as well as large industries are included. Our approach identifies industries that will benefit from a yen depreciation or that will be hurt from a yen appreciation.Öğe On the asymmetric effects of exchange rate uncertainty on China's bilateral trade with its major partners(Elsevier, 2022) Xu, Jia; Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinFollowing recent advances in asymmetric impact of exchange rate volatility on trade flows, we assess the symmetric and asymmetric effects of exchange rate volatility on China's bilateral trade with each of its 21 trading partners. We find symmetric effects in only a few bilateral trade models. However, the asymmetric analysis which required using nonlinear models revealed short-run asymmetric effects in almost all export and import demand models and log-run significant asymmetric effects in 50% of the models. In almost all models, while increased volatility was found to hurt Chinese trade, decreased volatility was found to boost them, implying that stable exchange rate is beneficial for China's trade.(c) 2021 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.Öğe On the link between US-China commodity trade and exchange rate uncertainty: An asymmetric analysis(Wiley, 2022) Xu, Jia; Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinPrevious studies that assessed the impact of exchange rate volatility on Chinese trade flows reported mixed findings. They all have assumed that the effects are symmetric. In this paper, we investigate the possibility of asymmetric effects of the real yuan-dollar volatility on the trade flows of 84 2-digit industries that trade between the two countries. We show that estimating asymmetric and nonlinear models for each industry yields much more significant outcomes than estimating symmetric and linear models. We find that trade flows of 2/3rd of industries are affected asymmetrically in the short run. Short-run effects last into asymmetric adverse long-run effects in 35 U.S. exporting industries (with export share of 45%) to China and in 44 Chinese exporting industries (with 76% export share) to the U.S. Since increased volatility hurts a significant share of both countries' exports, a stable yuan-dollar rate as well as inflation rate will benefit both countries in the long run.Öğe Russia's Trade With G7 Countries and Asymmetric J-Curve Effect(Wiley, 2024) Bahmani-Oskooee, Mohsen; Aftab, Muhammad; Karamelikli, HuseyinThis study investigates the relationship between exchange rates and trade balance, specifically focusing on Russia's trade dynamics with the Group of Seven (G7) countries. Employing a multifaceted approach, we scrutinize the asymmetric responses evident in the trade balance concerning fluctuations in exchange rates. Our investigation, rooted in linear analysis, initially reveals that rubble depreciation predominantly impacts the Russian trade balance adversely in the short term, albeit demonstrating a positive influence on trade balance in select instances over the long run-an observation aligned with the established J-curve phenomenon. However, as we transition to nonlinear analysis, our findings yield stronger substantiation for the J-curve hypothesis. Notably, our research underscores the asymmetric nature of exchange rate changes' effects on trade balance. Moreover, through nonlinear modeling techniques, we observe a pronounced enhancement in the convergence toward establishing a long-term relationship between these variables. This emphasizes the significance of nonlinear approaches in comprehending the complexities inherent in exchange rate-trade balance dynamics of Russian trade with G7.Öğe Singapore's Trade in Financial and Insurance Services and the Role of the Exchange Rate: An Asymmetric Analysis(Taylor & Francis Ltd, 2024) Bahmani-Oskooee, Mohsen; Halicioglu, Ferda; Karamelikli, HuseyinTwo studies have assessed the link between the exchange rate and trade in services. While one study concluded that the U.S. insurance and financial service trade is not affected by the exchange rate, another study reversed that finding by applying a non-linear method. We add to this literature by considering Singapore's experience. After estimating the linear and non-linear ARDL models using Singapore's imports and exports of insurance and financial service trade, we conclude that changes in the real effective value of the Singapore dollar have both short-run and long-run effects on Singapore's trade in both services.Öğe The Turkey-US commodity trade and the asymmetric J-curve(Springer, 2021) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinUnlike past studies, recent studies try to separate currency appreciations from depreciations and show that indeed, the effects of exchange rate changes on the trade balance are asymmetric. We add to this literature by considering the response of the trade balance of 45 industries that trade between Turkey and the USA We find that the real lira-dollar rate has short-run asymmetric effects in 28 out of 45 industries. Short-run asymmetric effects translate into the long-run asymmetric effects in only 13 industries. While our findings are industry specific, additional analysis revealed that in some industries while depreciations had significant effects, appreciations did not, in some other industries the opposite was true. Such findings were hidden by the estimates of past traditional linear models.Öğe UK-China Trade and the J-Curve: Asymmetric Evidence from 68 Industries(Routledge Journals, Taylor & Francis Ltd, 2021) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinUsing monthly data over the period 2010M1-2018M12 we investigate the impact of the real yuna-pound rate on the trade balance of each of the 68 2-digit industries that trade between Britain and China. When a linear ARDL model was estimated, we found short-run symmetric effects in the trade balance of 45 industries that lasted into the long run only in 24 industries. Comparable numbers from the estimates of the nonlinear model were 64 and 39, respectively. The symmetric (asymmetric) J-curve effect received support in 17 (19) industries from the linear (nonlinear) model. Although the increase from the symmetric to asymmetric J-curve effect was not substantial, for the largest industry, i.e., industry coded 85 (Electrical machinery and equipment with 19.56% share of trade), while the symmetric J-curve was not supported, the asymmetric J-curve was. This highlights the significance of the nonlinear adjustment of the yuan-pound exchange rate.Öğe UK-German Commodity Trade and Exchange-Rate Volatility: An Asymmetric Analysis(Taylor & Francis Ltd, 2022) Bahmani-Oskooee, Mohsen; Karamelikli, HuseyinWe assess the response of trade flows between Britain and Germany to exchange rate volatility. When we estimated a linear model, we found short-run effects of volatility in 36 British exporting industries that lasted into the long run only in 23 industries. The comparable number for German exporting industries were 42 and 17, respectively. However, when we estimated a nonlinear model, we found short-run asymmetric effects of volatility in 54 British exporting industries that lasted into the long run in 38 industries. The comparable number for German exporting industries were 64 and 42, respectively. Almost all affected industries were small.
