Dynamics of the U.S. Trade With Developing Countries

Earlier studies that investigated the J-Curve phenomenon employed aggregate trade data. Due to the aggregation bias problem, a few recent studies have shifted their emphasis toward using disaggregated data at bilateral level. However, studies related to the U.S., have investigated the phenomenon between the U.S. and her six largest trading partners. Given that developing countries constitute almost half of the U.S. trade, in this paper we test the short-run and the long-run effects of depreciation of the dollar on the bilateral trade balance between the U.S. and 13 developing countries.