Does the J-Curve Effect Apply to Mexico's Trade Balance?
Bernice Torres Santamaria
Co-Presenters: Individual Presentation
College: College of Business and Public Management
Major: Global Business
Faculty Research Mentor: Nazif Durmaz
Abstract:
In this paper, we use data from nine Mexican service industries to investigate the asymmetric J curve theory. Using the linear autoregressive distributed lag (ARDL) technique, we discovered support for a symmetric J curve in transportation and travel services, as well as the inverse J curve in financial and information services. However, using the nonlinear ARDL technique, we discovered support for the asymmetric J curve in travel services and the asymmetric inverse J curve in financial, information, and construction services. The change from four to four cases emphasizes the unequal adjustment of the peso's actual effective exchange rate across Mexico's service sectors.