The impacts of exchange rate on US adjusted bilateral trade balance with Germany under Brexit : a comparative analysis

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Ongan, Serdar and Gocer, Ismet and Karamelikli, Huseyin (2025) The impacts of exchange rate on US adjusted bilateral trade balance with Germany under Brexit : a comparative analysis. Manchester School, 93 (1). pp. 1-29. ISSN 1467-9957 (https://doi.org/10.1111/manc.12494)

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Abstract

This study reveals the hidden dynamics of USA-Germany international trade through a revised J-curve hypothesis. It emphasizes the inadequacy of the traditional Bilateral Trade Balance (BTB) ratio based on total exports. To this aim, it introduces two new testing approaches based on adjusted BTB: the GDP-driven-BTB-based J-curve hypothesis (GDPJ) and the Non-GDP-driven-BTB-based J-curve hypothesis (NGDPJ). The empirical findings advocate the necessity of these alternative tests, offering policymakers more informative results than the traditional approach. GDPJ is validated for 13 goods, while NGDPJ and traditional methods are validated for 10 and 8 goods. These results underscore the risks of solely relying on the traditional approach. By embracing the revised J-curve hypothesis and alternative BTBs, policymakers can gain deeper insights into the USA-Germany trade relationship. One interpretation is that, under Brexit, German consumers reduce their purchases of re-exported goods more than domestically produced goods from the US.

  • Item type:Article
    ID code:89968
    Dates:
    Date
    Event
    January 2025
    Published
    12 June 2024
    Published Online
    29 May 2024
    Accepted
    2 November 2023
    Submitted
    Notes:Copyright © 024 Owner. This is the peer reviewed version of the following article: Ongan, S, Gocer, I & Karamelikli, H 2024, 'The impacts of exchange rate on US adjusted bilateral trade balance with Germany under Brexit: a comparative analysis', Manchester School, which has been published in final form at https://doi.org/10.1111/manc.12494. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
    Subjects:Social Sciences > Communities. Classes. Races > Regional economics. Space in economics
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:20 Jul 2024 01:37
    Last modified:16 Dec 2024 09:46
    URI:https://strathprints.strath.ac.uk/id/eprint/89968
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