WHERE HAVE ALL THE INTERNATIONAL J-CURVES GONE? : A QUARTERLY TIME-SERIES APPROACH FOR SINGAPORE

Abstract

The objective of this study has been to verify the J-curve hypothesis for Singapore vis-a-vis the United States using a quarterly time-series econometric approach from 1970 Q1 to 1997 Q4. From recent studies in Rose and Yellen (1989), Rose (1990) and Rose (1991), the use of a partial reduced form methodology suggests that the J-curve may not exist after all. We applied their methodology on the Singapore context using a general to specific approach. We found unit roots in the time-series data but not any cointegrating relationship. The central conclusion is that real exchange rate does not have a significant impact on the bilateral real trade balance. In other words, the J­curve does not exist for Singapore with respect to United States data