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Assessing the existence of the J-curve effect on trade in Malaysian forest products


Abdul Samad, Abdul Rahim and Othman, Mohd Shahwahid (2014) Assessing the existence of the J-curve effect on trade in Malaysian forest products. Malaysian Journal of Economic Studies, 51 (2). pp. 141-150. ISSN 1511-4554


This paper examines the dynamic effect of Malaysian exchange rate indices on bilateral trade for Malaysian forest products namely fibreboard, particle board and pulp for paper. Special attention is given to investigate the J-curve hypothesis: whether or not the trade balance for Malaysian forest products trade benefits from a decline in the value of the Ringgit Malaysia (RM). We adopt the autoregressive distributed lag (ARDL) approach to cointegration in estimating the annually bilateral trade data of Malaysian forest products trade with various countries in the world from 1970 to 2010. We find no evidence of the J-curve phenomenon for the Malaysian forest products trade. In the long run analysis, we found that Malaysian exchange rate is insignificant in influencing the Malaysian forest products trade balance. This implies that there are no changes in the trade balance for fibreboard, particle board and pulp for paper trade, regardless of whether the Malaysian exchange rate depreciates or appreciates. However, income variables are found to be important factors in determining the Malaysian trade only in pulp for paper product.

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Official URL or Download Paper: http://mjes.um.edu.my/811-990

Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
Publisher: Malaysian Economic Association and the Faculty of Economics and Administration, University of Malaya
Keywords: Autoregressive distributed lag approach to cointegration; Exchange rate; J-curve effect
Depositing User: Nabilah Mustapa
Date Deposited: 25 Jun 2015 06:07
Last Modified: 15 Apr 2020 16:51
URI: http://psasir.upm.edu.my/id/eprint/36547
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