Abstract

This article replicates and extends the study that investigated the effects of exchange rate changes on the bilateral trade balance of U.S. agriculture with its 15 major trading partners, specifically testing the applicability of the J-curve hypothesis to the U.S. agricultural trade balance. The replication covers eight of the original fifteen countries, while the extension includes three BRICS countries. The analysis employs the ARDL approach using quarterly data from the USDA and IMF websites, spanning from 1989Q1 to 2007Q4 for the replication and from 1996Q1 to 2023Q1 for the extension. Results from both the replication and extension reveal that exchange rate fluctuations significantly affect the U.S. agricultural bilateral trade balance with certain countries. Specifically, while dollar depreciation improves the U.S. agricultural trade balance with some countries, it worsens it with others. The direct implication of these results is that the policy of dollar depreciation will, in the long term, enhance the U.S. agricultural trade balance with some countries while worsening it with others. However, no evidence supporting the J-curve phenomenon is found.

Key words: J-curve, trade balance, exchange rate fluctuation, cointegration, replication and extension.