Tripti Gupta, Gargi Bandyopadhyay
This research paper scrutinizes the international trade sectors of India and Pakistan between 1983 and 2013. Utilizing tools such as the J-curve and the Marshall-Lerner condition, the study examines structural changes in these countries' domestic markets due to various reforms, policy measures, and economic situations that affected their international trade shares. An export-import model was derived using annual data on Exports, Imports, GNI, Exchange Rate, and World Income from the World Bank database. This model underwent econometric analysis for stationarity and cointegration via SAS, followed by OLS technique to establish import and export elasticity. The trade balance was analyzed over the 31-year period to investigate the J-curve effect. Results indicate that both countries meet the Marshall-Lerner condition criteria, with differing degrees of satisfaction due to export and import elasticity. The study confirms the existence of the J-curve in India but not in Pakistan, despite high export elasticity. These findings contribute to understanding the relationship between trade balance and domestic currency, offering insights for monetary policy and future research in India and Pakistan, while also aiding global market development.