Volume 13, Issue 1 (Winter 2018)                   J. Mon. Ec. 2018, 13(1): 51-61 | Back to browse issues page

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Ebrahimi M, Hojabr Kiani K, Memarnejad A, Ghaffari F. Nonlinear Asymmetric Effects of Devaluation on Trade Balance: A Case Study of Iran and South Korea. J. Mon. Ec.. 2018; 13 (1) :51-61
URL: http://jme.mbri.ac.ir/article-1-351-en.html
1- Department of Economics, Science and Research Branch, Islamic Azad University
2- Depaertment of Economics, Shahid Beheshti University
Abstract:   (1266 Views)
The present paper analyzes the existence of a long-run relationship between the trade balance and exchange rate of Iran and South Korea by a new approach. It proposes an asymmetric co-integrating NARDL model by two positive and negative partial sum decompositions which can use mixed I (0) and I (1) variables by bounds testing approach. The proposed tests are based on calculated F –statistics and Error Correction Model (ECM) used to test the importance of the lagged levels of variables in an equilibrium correction model. Non-Linear ARDL approach has employed to study the reaction of the trade balance to currency devaluation. The bounds test of the NARDL model implies the presence of cointegration among the variables. Our empirical findings demonstrate that currency devaluation has asymmetric effects on the trade balance of Iran and South Korea by non-linear modeling. Furthermore, the J-curve phenomenon is not supported in this case.
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Type of Study: Original Research - Theoric | Subject: Economics
Received: 11 Dec 2018 | Accepted: 19 Aug 2019 | Published: 23 Sep 2019

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