The S-curve Behaviour of the Trade Balance
| DOI | 10.1177/0015732516650826 |
| Author | Abdurrahman Korkmaz,Mustafa Erhan Bilman |
| Published date | 01 February 2017 |
| Date | 01 February 2017 |
| Subject Matter | Articles |
The S-curve Behaviour
of the Trade Balance:
A Stepwise Procedure
Abdurrahman Korkmaz1
Mustafa Erhan Bilman1
Abstract
A stepwise testing procedure based on the causality theory in statistics is
suggested in this study to test for the S-curve hypothesis which puts forward
that the trade balance is uniformly countercyclical and negatively correlated,
in general, with current and future movements in terms of trade, but positively
correlated with past movements. S-curve hypothesis is investigated in this
study by relying on two pillars. Firstly, the existence of an S-shaped pattern
is investigated at both industry and aggregate levels and, if any, statistical
significance of this pattern is tested. Having detected an S-curve pattern,
secondly the two distinct processes made up of positive and negative cross-
correlation coefficients that lead to the S-shaped behaviour are evaluated
separately and their statistical significance is tested. Thus, the second stage
makes it possible to perform a robustness check for the findings from the first
stage. By applying this procedure to Turkish trade data at both industry and
aggregate levels for the period 2003:1–2011:4, S-curve dynamics have been
found in only one out of nine industries (i.e., manufactured goods classified
chiefly by material). The findings also suggest that the aggregate data do not
exhibit an S-curve behaviour.
JEL: C18, C22, F14
Keywords
s-curve, j-curve, HLM effect, cross-correlation, causality
Foreign Trade Review
52(1) 1–14
©2017 Indian Institute of
Foreign Trade
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0015732516650826
http://ftr.sagepub.com
Article
1 Izmir KatipCelebi University, Faculty of Economics and Administrative Sciences, Department of
Economics, Çigli-Izmir-Turkey.
Corresponding author:
Abdurrahman Korkmaz, Izmir KatipCelebi University, Faculty of Economics and Administra-tive
Sciences, Department of Economics, 35620, Çigli-Izmir-Turkey.
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