Revisiting the Existence of J-Curve Effect Between Bangladesh and USA


Mohammad Shafiur Rahman Chowdhury

Journal: Bangladesh Journal of Political Economy

(pp: 71-82) | Doi No: http:/



This study attempts to revisit the existence of the J-curve effect between Bangladesh and the USA, one of its major trading partners of her, by using annual data from 1986-to 2020. The J-curve phenomenon states that currency depreciation initially decreases before increasing the trade balance. In this study, the Co-integration test shows a long-run association between trade balance, exchange rate, domestic income, and foreign income. OLS is applied to estimate the impact of the exchange rate on the trade balance. The calculated result shows that domestic currency depreciation negatively affects the trade balance, which means that depreciation does not improve the trade balance in the long run.

On the other hand, negative domestic and foreign income affect the trade balance. An increase in domestic income worsens the trade balance, and an increase in foreign income improves it. This study finds no J-curve effect in Bangladesh.



Md. Anishur Rahman


+88 02 222225996


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