Abstract

Some studies have tried recently to assess the causes of Malaysia’s substantially increasing trade in non-Halal beverages. However, no study assessed the dynamic effects of real exchange rate movements, known as the J-Curve theory. To have a comparative basis for the analysis, we assess the theory in both Halal and non-Halal beverages between Malaysia and five of its largest trading partners independently for the period 1994-2012. Using ARDL approach to cointegration, and ECM model we find that: (1) Malaysia’s trade in beverages in the short-run is affected by exchange rate movements in most of the cases, (2) Most importantly, Malaysia’s trade in non-Halal beverages seems not to be affected by none of the economic explanatory variables used in the study in the long-run, and (3) Among the ten cases of five partners and two sectors, we find support for the J-Curve in the case of bilateral trade with the UK in Halal beverages.

This work is licensed under a Creative Commons Attribution 4.0 License.