Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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The Real Exchange Rate Effect on Bilateral Trade Balance between Korea and ASEAN Countries

실질 환율이 한국의 대(對) ASEAN 무역수지에 미치는 영향 분석

  • 조정환 (고려대학교 미래성장연구소)
  • Received : 2019.01.02
  • Accepted : 2019.02.26
  • Published : 2019.02.28
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Abstract

This study is to investigate the effect of real exchange rate on bilateral trade balance between Korea and ASEAN 10 countries. Using quarterly data from 1991 to 2017 the paper analyzes whether or not the real depreciation of Korea's won could improve the trade balance in the short and long term. Based on Autoregressive Distributed Lag(ARDL) model, the empirical results show that trade balance, GDP, and real exchange rate are all cointegrated, representing the long-run relationship among variables. In the consideration of long-run relationship, the increases in ASEAN countries' GDP could have a negative impact and Korea's GDP positive impact on trade balance between Korea and ASEAN countries unexpectedly. For the main variable, the paper did not find the long-term effect of real exchange rate on the trade balance, for the short-term effect of the real exchange rate it was found that there exists the J-curve effect only in the case of Vietnam and Brunei. Therefore, these results imply that the intended policy concerning the exchange rate in the free-floating exchange rate system could be limited to improve the trade balance between Korea and ASEAN countries.

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References

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