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Dynamic Perspective of Trade Balance: Evidence from Southeast Asia before the Global Financial Crisis of 2008

Author

Listed:
  • Putu Mahardika Adi Saputra

    (Department of Economics, University of Brawijaya, Indonesia. Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract
Objective � This paper studies the influence of some determinants of trade balance for Southeast Asia countries in dynamics perspective before the global financial crisis of 2008. Methodology/Technique � Based on quarterly data (1980q1 to 2007q3), the investigation is carried out using VECM. Findings � The results show that in the long run: (i) income effect is found to be dominant in determining the change in trade balance; (ii) the cash balance effect does influence bilateral trade; (iii) bilateral trade is affected by exchange rate movements. Further, the effect of small economies are suspected to be present in Southeast Asia region. Meanwhile, in the short run: (i) the cash balance effect plays a major role in influencing trade balance improvement; (ii) compared to the cash balance effect, the income effect is present with slightly less contribution; (iii) the exchange rate effect is observed in the analysis, while a J-curve phenomenon exists in minor cases. Novelty � This paper concludes that in the long term, income effect is found to be dominant in determining the change in trade balance. Type of Paper: Empirical

Suggested Citation

  • Putu Mahardika Adi Saputra, 2019. "Dynamic Perspective of Trade Balance: Evidence from Southeast Asia before the Global Financial Crisis of 2008," GATR Journals jber170, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:jber170
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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