U.S.‐South America trade and the J‐Curve: An asymmetric analysis

We estimate the bilateral trade balance model of the United States with each of its 12 largest trading partners from South America in order to test both the symmetric and asymmetric J‐curve effect. When a linear ARDL model was estimated, we found support for the symmetric J‐curve in the U.S. trade balance with Argentina, Colombia, Guyana, Peru, Uruguay and Venezuela. However, when a nonlinear ARDL model was estimated, asymmetric J‐curve hypothesis was supported in the U.S. trade balance with Argentina, Bolivia, Brazil, Chile, Colombia, Guyana, Peru, Suriname and Uruguay. Thus, these countries can reduce their trade deficit with the United States by devaluation or depreciation.