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Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners

Received: 4 July 2017     Accepted: 12 July 2017     Published: 3 August 2017
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Abstract

The earlier researches investigated the J-curve hypothesis along with the Marshall-Lerner condition in Pakistan used the OLS, 2SLS, 3SLS, and Instrumental Variables (IV) techniques. The estimates obtained from these studies may suffer from spurious regression problems as the models were estimated without incorporating the co-integrating property of the variables. Hence, the objective of this work is to analyze the trade balance model using relatively the new co-integration approach, the ARDL model. The J-curve phenomenon is tested for Pakistan’s trade with her selected South Asian trade partners, including Republic of India and Democratic Socialist Republic of Sri Lanka using the annual time series data over the 1975-2013 periods. After empirical analysis, it was observed that the J-curve occurrence is rejected in favor of Pakistan with its trading partners. This study concludes that depreciation of Pakistani Rupee has a constructive result on Pakistan’s trade with these trade partners.

Published in European Business & Management (Volume 3, Issue 4)
DOI 10.11648/j.ebm.20170304.11
Page(s) 57-64
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

J-curve, Depreciation, Trade Balance, Cointegration, Pakistan, India, Sri Lanka

References
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    Waqar Khalid. (2017). Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners. European Business & Management, 3(4), 57-64. https://doi.org/10.11648/j.ebm.20170304.11

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    ACS Style

    Waqar Khalid. Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners. Eur. Bus. Manag. 2017, 3(4), 57-64. doi: 10.11648/j.ebm.20170304.11

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    AMA Style

    Waqar Khalid. Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners. Eur Bus Manag. 2017;3(4):57-64. doi: 10.11648/j.ebm.20170304.11

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  • @article{10.11648/j.ebm.20170304.11,
      author = {Waqar Khalid},
      title = {Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners},
      journal = {European Business & Management},
      volume = {3},
      number = {4},
      pages = {57-64},
      doi = {10.11648/j.ebm.20170304.11},
      url = {https://doi.org/10.11648/j.ebm.20170304.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20170304.11},
      abstract = {The earlier researches investigated the J-curve hypothesis along with the Marshall-Lerner condition in Pakistan used the OLS, 2SLS, 3SLS, and Instrumental Variables (IV) techniques. The estimates obtained from these studies may suffer from spurious regression problems as the models were estimated without incorporating the co-integrating property of the variables. Hence, the objective of this work is to analyze the trade balance model using relatively the new co-integration approach, the ARDL model. The J-curve phenomenon is tested for Pakistan’s trade with her selected South Asian trade partners, including Republic of India and Democratic Socialist Republic of Sri Lanka using the annual time series data over the 1975-2013 periods. After empirical analysis, it was observed that the J-curve occurrence is rejected in favor of Pakistan with its trading partners. This study concludes that depreciation of Pakistani Rupee has a constructive result on Pakistan’s trade with these trade partners.},
     year = {2017}
    }
    

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    T1  - Empirical Evidence on the J-Curve Between Pakistan and Selected South Asian Trade Partners
    AU  - Waqar Khalid
    Y1  - 2017/08/03
    PY  - 2017
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    JF  - European Business & Management
    JO  - European Business & Management
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    PB  - Science Publishing Group
    SN  - 2575-5811
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    AB  - The earlier researches investigated the J-curve hypothesis along with the Marshall-Lerner condition in Pakistan used the OLS, 2SLS, 3SLS, and Instrumental Variables (IV) techniques. The estimates obtained from these studies may suffer from spurious regression problems as the models were estimated without incorporating the co-integrating property of the variables. Hence, the objective of this work is to analyze the trade balance model using relatively the new co-integration approach, the ARDL model. The J-curve phenomenon is tested for Pakistan’s trade with her selected South Asian trade partners, including Republic of India and Democratic Socialist Republic of Sri Lanka using the annual time series data over the 1975-2013 periods. After empirical analysis, it was observed that the J-curve occurrence is rejected in favor of Pakistan with its trading partners. This study concludes that depreciation of Pakistani Rupee has a constructive result on Pakistan’s trade with these trade partners.
    VL  - 3
    IS  - 4
    ER  - 

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Author Information
  • School of Economics, Quaid-I-Azam University, Islamabad, Pakistan

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