earticle

영어

This study investigates the asymmetric effect of real exchange rate on trade balance in Korea. The nonlinear ARDL model of Shin et al. (2014) is employed as econometric methodology. While the linear ARDL model fails to find cointegration relationship between variables, nonlinear ARDL model captures cointegration relationship which is robust to lags and restrictions. We found there exist J-curve effect and the three types of asymmetries in relationship of trade balance and real exchange rate. First, long-run reaction asymmetry: depreciation improves trade balance, but appreciation does not work. Second, short-run impact asymmetry: contemporaneous change of exchange rate affects trade balance differently. Third, adjustment asymmetry: adjustment process on long-run equilibrium with face to appreciation and depreciation is not equal.