The Effect of Exchange Rates on Trade Balance: An Empirical Study of Morocco

2018 ◽  
Vol 3 (1) ◽  
pp. 01-10
Author(s):  
Hicham Sadok
Keyword(s):  
Exchange Rate ◽  
Empirical Study ◽  
Exchange Rates ◽  
Foreign Trade ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
Jel Classification ◽  
Strong Impact ◽  
J Curve ◽  
The Relationship

Objective - This paper aims to examine the relationship between exchange rates and trade balance in Morocco, to investigate whether the Marshall-Lerner condition and J-curve exist. Methodology/Technique - This paper attempts to identify the relationship between the real exchange rate and trade balance in Morocco between 2000 an 2015. Findings - Historically, exchange rates have had a strong impact on foreign trade in Morocco. Novelty - This study concludes that the fluctuation of exchange rates has no notable impact on the rate of foreign trade. Type of Paper: Empirical. Keywords: Exchange Rates; Trade Balance; Exports; Imports; Morocco. JEL Classification: D51, D59.

Investigating the Relationship between Trade Balance and the Exchange Rate: The Case of Laos’ Trade with Thailand

2018 ◽  
Vol 19 (3) ◽  
pp. 590-603 ◽  
Author(s):  
Phouphet Kyophilavong ◽  
Muhammad Shahbaz ◽  
Ijaz Ur Rehman ◽  
Somchith Souksavath ◽  
Sengchanh Chanthasene
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Trade Policy ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
The Real ◽  
J Curve ◽  
The Exchange Rate ◽  
The Relationship

We investigate the nexus between Laos’ trade balance and its real exchange rate with Thailand. We apply the combined cointegration approach and find that the trade balance and the real exchange rate have cointegration. The devaluation of Laos’ Kip improves the trade balance, but there is no evidence of the J-curve phenomenon. Laos’s economic growth causes its trade balance to deteriorate. A rise in Thai income increases the trade balance of Laos. This study presents new insights for policymakers who seek to sustain trade with Thailand by designing a comprehensive trade policy.

scholarly journals Real exchange rate and trade balance of Pakistan: an empirical analysis

2013 ◽  
Vol 01 (01) ◽  
pp. 44-51
Author(s):  
Muhammad Bilal Saeed ◽  
Ijaz Hussain
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
Short Term ◽  
Correction Model ◽  
J Curve ◽  
Short Run ◽  
The Relationship ◽  
Balance Error

This study evaluates the relationship between real exchange rate and trade balance prevailed in Pakistan during the 1985-2010 period. Engel Granger residual based and Johansen Juselius tests have been used to inquire into the long term connection between exchange rate and trade balance. Error correction model is then employed to study the short term connection. It has been discovered that there exists a connection between real exchange rate and trade balance in long as well as short run. The evidences set forth lead to a decisive conclusion that Marshall Lerner Condition and J curve effect both hold in case of Pakistan.

The Effect of Real Exchange Rate on Trade Balance in a Resource-Rich Economy: The Case of Mongolia

2018 ◽  
Vol 53 (4) ◽  
pp. 211-224 ◽  
Author(s):  
Gan-Ochir Doojav
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
Developing Economies ◽  
Jel Classification ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
Short Run ◽  
Exchange Rate Depreciation

For resource-rich developing economies, the effect of real exchange rate depreciation on trade balance may differ from the standard findings depending on country specific characteristics. This article employs vector error correction model to examine the effect of real exchange rate on trade balance in Mongolia, a resource-rich developing country. Empirical results show that exchange rate depreciation improves trade balance in both short and long run. In particular, the well-known Marshall–Lerner condition holds in the long run; however, there is no evidence of the classic J-curve effects in the short run. The results suggest that the exchange rate flexibility may help to deal effectively with current account deficits and exchange rate risk. JEL Classification: C32, C51, F14, F32

scholarly journals The relationship between petroleum price and real exchange rate: an example of Iraq

2021 ◽  
Vol 11 (1) ◽  
pp. 12-17
Author(s):  
Dindar Saeed Saeed ◽  
Sadeq Taha Abdulazeez ◽  
Sarbast Kamal Rasheed ◽  
Rogash Younis Masiha ◽  
Diyar Hashim Malo
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Unit Root Test ◽  
Causality Analysis ◽  
Petroleum Price ◽  
Energy Product ◽  
The World ◽  
The Exchange Rate ◽  
The Relationship

Petroleum is one of the world's most important economic products. It is widely accepted that petroleum is not only an energy product, but also a financial asset. Therefore, it is important to understand the dependence of petroleum prices on economic conditions and financial markets and how they can affect the world economy. The fluctuations in world petroleum prices affect the economies of petroleum importing countries through different channels. One of the most important of these influence channels is the exchange rate. Because changes in exchange rates cause different economic problems in fragile economies. Changes in petroleum prices affect the economic performance of any country through various channels. One of the channels of influence is exchange rates. Petroleum prices affect the transfer of income from petroleum exporting countries to petroleum importing countries through trade and thus determine the exchange rate. In this study, the Relationship between Petroleum Price and Real Exchange Rate in Iraq was examined by ADF unit root test, Johansen-Juselius cointegration test and Granger causality analysis. For the analysis, the Petroleum Price and Real Exchange Rate data of Iraq were taken from the official website of the World Bank and transferred to the Eviews 10 program and necessary analyzes were made. The results of the analysis were analyzed and interpreted in tables.

scholarly journals Asymmetric effect of exchange rate volatility on trade balance in Nigeria

2021 ◽  
Vol 3 (3) ◽  
pp. 342-359
Author(s):  
Nuraddeen Umar Sambo ◽  
◽  
Ibrahim Sambo Farouq ◽  
Mukhtar Tijjani Isma'il ◽  
◽  
...  
Keyword(s):  
International Trade ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Financial Development ◽  
Trade Balance ◽  
Exchange Rate Volatility ◽  
The Real ◽  
Non Linear ◽  
The Relationship ◽  
Real Exchange Rate Volatility

<abstract> <p>The relationship between real exchange rate volatility and the trade balance has been a contentious issue since the fall of Bretton woods agreement of 1973, owing to the lack of unanimity on the effect. This article provides empirical evidence of the link between the real exchange rate volatility and the trade balance in the light of financial development, confirming the assertion that the effect is significantly dependent on the country's level of financial development. Due to Nigeria's relatively undeveloped financial system, its exchange rate dampens the country's exports. Rather than studying the relationship in isolation, we examine the moderating role of financial development on the link between export and the real exchange rate volatility in this paper. The empirical estimation is based on the Nigeria's data set spanning the years 1980–2019, and it employs threshold autoregressive non-linear co-integration and non-linear ARDL estimation techniques. According to the findings, financial development magnifies the beneficial benefits of the real exchange rate on Nigeria's foreign trade. It also states that the uncertainty in foreign capital flows has a negative impact on Nigeria's international trade. The findings have broad policy implications, implying that in order to diversify and improve the economy's future growth and associated international trade, Nigeria's policymakers should promote adequate financial sector development, as financial shocks are amplified by poorly implemented credit markets.</p> </abstract>

scholarly journals EFFECT OF EXCHANGE RATE VOLATILITY ON UGANDA'S TRADE BALANCE

2021 ◽  
Vol 8 (5) ◽  
pp. 532-574
Author(s):  
Qianling Shen ◽  
Henry Orach ◽  
Pu Chen ◽  
Shiying Wei ◽  
Hassan Ssewajje ◽  
...  
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Trade Balance ◽  
Real Exchange Rates ◽  
Exchange Rate Volatility ◽  
Data Generation ◽  
Long Run ◽  
Short Run ◽  
Adf Test

This study examines the long-run and the short-run relationship between the real exchange rate, GDP, FDI, inflation (INF), gross capital formation (GCF), Net official's development assistance (NODA), GNI, and trade balance in Uganda for the period 1994-2018. We used an Augmented Dickey-Fuller (ADF) test for the stationarity test, and we use the Johannsen cointegration approach to prove the existence of cointegration. The ADF tests show that the series was non-stationary in level but became stationary after the first difference. The Johannsen cointegration test indicates the long and short-run relationship between all the explanatory and trade balance in Uganda. Under such circumstances, a Vector Error Correction Model (VECM) is employed since the results offer more information than other data generation processes. Our findings are as follows: Real exchange rates, FDI, GCF and have a positive relationship with Trade balance. It means that Uganda can depreciate the Exchange rate to improve its Trade balance. The results proved the J-Curve effect's existence (i.e., the long-term impact of exchange rate on trade balance). The recommendations from this study are - Uganda's monetary policy management should emphasize more efforts on the stability and minimization of the volatility of exchange rates of the shillings since its movements affect international prices both negatively and positively, leading to either a decline or trade boost. Keywords: Trade balance; Real exchange rate; Net official's development assistances; GNI; VECM model; Uganda

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