Vol.:(0123456789) Eurasian Economic Review (2019) 9:493–513 https://doi.org/10.1007/s40822-018-0116-2 1 3 ORIGINAL PAPER Kazakhstan trade with its partners and the role of tenge: an asymmetric analysis Mohsen Bahmani‑Oskooee 1  · Hanafah Harvey 2  · Amr Hosny 3 Received: 7 May 2018 / Revised: 2 September 2018 / Accepted: 5 September 2018 / Published online: 7 December 2018 © Eurasia Business and Economics Society 2018 Abstract Previous research has shown that lack of any short-run and long-run relationship between the trade balance and the exchange rate could be due to ignoring non-lin- ear adjustment of the exchange rate. In this paper, we introduce non-linearity of the exchange rate adjustment and consider the asymmetric response of Kazakhstan’s trade balance with each of its 13 trading partners. While we fnd short-run asymmet- ric response in almost all 13 models, short-run asymmetric efects translate into the long run only in the trade with Austria, China, France, and the U.S. Only in the trade with France a tenge depreciation had favorable long-run efects. Keywords Trade balance · Exchange rate · Asymmetry efects · Kazakhstan · 13 partners 1 Introduction Recent episodes of tenge depreciation had renewed the interest in understanding its potential impact on the dynamics of the trade balance in Kazakhstan. The tenge has typically depreciated in nominal terms to preserve competitiveness with its trading Valuable comments of two anonymous reviewers as well as those of the editor and associate editor are greatly appreciated. Any error, however, is our responsibility. Views suggested in the paper are those of the authors only and not their afliated organizations. * Mohsen Bahmani-Oskooee bahmani@uwm.edu Hanafah Harvey hhh10@psu.edu Amr Hosny ahosny@imf.org 1 The Center for Research on International Economics, Department of Economics, The University of Wisconsin-Milwaukee, Milwaukee, USA 2 Department of Economics, Pennsylvania State University, Mont Alto, Mont Alto, PA 17237, USA 3 Strategy Policy and Review Department, International Monetary Fund, Washington, USA