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Seoul Journal of Economics - Vol. 37 , No. 1

[ Article ]
Seoul Journal of Economics - Vol. 35, No. 3, pp. 291-315
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2022
Received 09 Jul 2022 Revised 03 Aug 2022 Accepted 04 Aug 2022
DOI: https://doi.org/10.22904/sje.2022.35.3.004

How Sustainable Are Trade Balances in China, Japan, and Korea?
Manuchehr Irandoust
Manuchehr Irandoust, Independent Researcher, Mellbystrand, Sweden, Tel: +46-721631811 (manuch.dost@gmail.com)

JEL Classification: F30, F31


Abstract

Previous studies of trade flows have been based on bivariate analysis and residual-based panel cointegration techniques. This paper studies the long-run relationship between exports and imports in China, Japan, and Korea by applying the likelihood-based panel cointegration technique and multivariate analysis. The results indicate that there exists a long-run steady-state relationship between exports and imports. The policy implications of our findings are that trade flows do not lead to the violation of international budget constraints and, more importantly, there is no productivity gap between the domestic economy and the rest of the world. This implies a lack of permanent technological shocks to the domestic economy. The existence of cointegration between imports and exports in the sample countries also suggests that their macroeconomic policies are effective in bringing exports and imports into balance.


Keywords: Imports, Exports, Cointegration, China, Japan, Korea

Acknowledgments

The author would like to thank an anonymous referee for his/her useful comments. The usual disclaim applies. And the author reports that there are no competing interests to declare.


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