Macroeconomic Dynamics and Trade Balance: New Insights from Korea-G-7 Trade Relations

Macroeconomic Dynamics and Trade Balance: New Insights from Korea-G-7 Trade Relations | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Macroeconomic Dynamics and Trade Balance: New Insights from Korea-G-7 Trade Relations Jungho Baek, Ga Eun Lee, Kyoung Doug Kwon This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7634205/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Our investigations reveal that macroeconomic variables associated with income and exchange rates, commonly included in empirical analyses of Korea's trade balance, remain crucial for explaining Korea's trade flows. This study presents the most comprehensive investigation thus far into the connection between macroeconomic factors and Korea's trade balance with the G-7 countries. It integrates insights from four primary economic theories—elasticity, Keynesian income, absorption, and the monetary approach. Utilizing the Autoregressive Distributed Lag (ARDL) model, we examine the short- and long-term effects of variables such as income, exchange rates, government spending, and interest rates on Korea's bilateral trade flows, specifically emphasizing exports and imports. Our findings validate the persistent significance of income and exchange rates in shaping the trade balance, which is consistent with previous research. Furthermore, the study sheds light on the significant yet varied impacts of government spending and interest rates—factors that have not been studied before—across different trade patterns and timeframes. Particularly, Korean exports to the G-7 nations are notably influenced by changes in government spending and interest rates. In contrast, imports exhibit more pronounced reactions to these variables in the short term than in the long term. This analysis enriches our understanding of the macroeconomic drivers behind Korea's trade balance and provides valuable insights for policy development. JEL Classification: C22, F14, O50 G-7 Korea Macroeconomy trade Full Text Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. 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