ISSN: 1648 - 4460

International Journal of Scholarly Papers


Transformations  in
Business & Economics

Transformations in
Business & Economics

  • © Vilnius University, 2002-2009
  • © Brno University of Technology, 2002-2009
  • © University of Latvia, 2002-2009
An Empirical Test of the J-curve for Estonia, Latvia, and Lithuania and Policy Implications
Yu Hsing, Bruno S. Sergi

ABSTRACT. This paper studies the J-curve for the bilateral trade between Estonia, Latvia, Lithuania and the U.S. The vector-error correction model and the impulse response function are applied in empirical work. The J-curve is empirically confirmed for Estonia but not substantiated for Latvia and Lithuania. After a shock to real depreciation, the trade balance deteriorates for Estonia in the second quarter and improves afterward, deteriorates continually for Latvia, and improves continually for Lithuania. Hence, there is no common pattern found for these three countries.

KEYWORDS: J-curve, trade balance, real depreciation, VECM, impulse response function, Lithuania, Latvia, Estonia.

JEL classification: F10, O52.

Editorial correspondence:

Scholarly papers Transformations in Business & Economics
Kaunas Faculty
Vilnius University
Muitinės g. 8
Kaunas, LT-44280



Valid XHTML 1.0 Strict