Empirical Test of the J-curve in China Using ARDL Bounds Test
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| Title | Empirical Test of the J-curve in China Using ARDL Bounds Test
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| Author | Huang Changli |
| Organization | Central University of Finance and Economics |
| Email | huangchangli1972@126.com |
| Key Words | Marshall-Lerner Condition; J-curve effect; RMB’S REER; export and import |
| Abstract | Conclusions on Marshall-Lerner condition and J-curve effect are mixed from literatures. It’s instructional to reexamine these hypotheses for the monetary authority to constitute exchange rate policy. This study analyze the long-run relationship of China’s export and import function based on general equilibrium model for the sample period 1997Q1-2013Q4, using ARDL bounds testing method. The results suggest that the general equilibrium model is better than partial equilibrium model; the export function, import function and trade balance function all are cointegrated and stable. There is clear evidence that RMB’s REER remarkably influences export and import, M-L condition hold, and the J-curve effect exists. This study also highlights some policy implications. |
| Serial Number | WP706 |
| Time | 2014-09-19 |
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