Aggregation, asymmetry, and common factors for Bangladesh’s exchange rate–trade balance relation
Bibliographic Data
| ID | 21542295 |
|---|---|
| Authors | Rabeya Khatoon (0000-0001-7966-9206, University of Bristol, corresponding author), Md Emran Hasan (0000-0003-0221-1090), Emran Hasan (0000-0002-7958-3151, Bangladesh University of Professionals), Md Wahid Ferdous Ibon (University of Dhaka), Shahidul Islam (0000-0002-9385-101X, Purdue University West Lafayette), Jeenat Mehareen (0000-0001-6991-8213, East West University), Rubaiya Murshed (0000-0003-4226-2239, University of Dhaka), Md Nahid Ferdous Pabon (Bangladesh Institute of Development Studies), Md Jillur Rahman (Jagannath University), Musharrat Shabnam Shuchi (United International University) |
| Year | 2022 |
| Volume | 62 |
| Issue | 6 |
| Pages | 2739-2770 |
| Publication date | 2022-06-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Empirical Economics (JOURNAL) |
| Journal identifiers | ISSN: 0377-7332 • E-ISSN: 1435-8921 |
| Publisher | Springer Science and Business Media LLC (PUBLISHER) |
| DOI | 10.1007/s00181-021-02127-y |
| OpenAlex | W3201157972 |
| Language | EN |
| Citations received | 1 |
| References cited | 39 |
We present an application of the recent CS-ARDL methodology in the context of a country’s trade balance–exchange rate relationship. The trade balance is expected to deteriorate first before improving in response to currency depreciation and vice versa, widely known as the J-curve effect satisfying the Marshall–Lerner condition in the long run. Combining bilateral and aggregate analysis in one setting by constructing specific panel data with one reference country, we find that aggregate analysis is sensitive to our allowance for heterogeneity. Estimates using the aggregate time series data show evidence favoring the J-curve relation, whereas the aggregate analysis resulting from the panel time series data shows that currency appreciation improves trade balance in Bangladesh in the long run, which goes against the Marshall–Lerner condition. With the reference of the existing commodity-level literature, we argue that this atypical scenario lines with the realities of a ‘small’ economy like Bangladesh, where her exporters attempt to maintain their market share with some government support. The study provides essential policy suggestions by identifying the significant contributors to Bangladesh’s trade balance–exchange rate relationship: China, Japan, and Singapore
Aggregate data · Balance of trade · Commodity · Currency · Current account · Econometrics · Economics · Exchange rate · International economics · Macroeconomics · Microeconomics · Monetary economics · Panel data · Fiscal Policy and Economic Growth · Global trade and economics · Monetary Policy and Economic Impact
Modelling Asymmetric Cointegration and Dynamic Multipliers in a Nonlinear ARDL Framework
Testing Weak Cross-Sectional Dependence in Large Panels
Unit root tests for panel data
Common correlated effects estimation of heterogeneous dynamic panel data models with weakly exogenous regressors
Estimation and Inference in Large Heterogeneous Panels with a Multifactor Error Structure
Bounds testing approaches to the analysis of level relationships
Maximum Likelihood Estimation and Inference on Cointegration — With Applications to the Demand for Money
A simple panel unit root test in the presence of cross‐section dependence
Is There a Debt-Threshold Effect on Output Growth
Factors affecting trade deficit in Pakistan, India and Bangladesh
Reconstructing Aggregate Euro‐zone Data
| Citations per year | 0.33 |
|---|---|
| Citation span | 2023 - 2023 (1) |
| Highly cited | No |