The Effects of Real Exchange Rate on Trade Balance in Cote d’Ivoire: Evidence from the Cointegration Analysis and Error-Correction Models
AbstractThis paper investigates the effect of real exchange rate on the balance of trade of Cote d’Ivoire using multivariate cointegration tests and vector error correction models with time series data covering the periods of 1975-2007. Our investigation results confirm the existence of long-run relationships among Trade Balance(TB), Real Exchange Rate(RER), and foreign and domestic incomes for Cote d’Ivoire. Estimated results also demonstrate that the (RER) has a significant positive influence on Cote d’Ivoire’s trade balance in both short and long-run under fixed real exchange rate management policies for the considering period. The Granger Causality test shows that the (RER) does Granger causes the trade balance then, based on the estimations, the Marshall-Lerner condition in Cote d’Ivoire’s data is explored by utilizing the Impulse Response Function (IFR) which traces the effect of (RER) on the trade balance viewing the J-curve pattern.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 21810.
Date of creation: 02 Apr 2010
Date of revision:
Key words: Real exchange rate; Trade balance; Cointegration test; VAR model; Granger Causality; IFR.;
Find related papers by JEL classification:
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
- Frankel, Jeffrey A, 1996.
"Recent Exchange-Rate Experience and Proposals for Reform,"
American Economic Review,
American Economic Association, vol. 86(2), pages 153-58, May.
- Frankel, Jeffrey A., 1996. "REcent Exchange Rate Experience and Proposals for Reform," Center for International and Development Economics Research, Working Paper Series qt62f2p0w1, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Jeffrey A. Frankel., 1996. "Recent Exchange Rate Experience and Proposals for Reform," Center for International and Development Economics Research (CIDER) Working Papers C96-060, University of California at Berkeley.
- David A. Dickey & Dennis W. Jansen & Daniel L. Thornton, 1991. "A primer on cointegration with an application to money and income," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 58-78.
- Singh, Tarlok, 2002. "India's trade balance: the role of income and exchange rates," Journal of Policy Modeling, Elsevier, vol. 24(5), pages 437-452, August.
- Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-76, December.
- Rose, Andrew K., 1991. "The role of exchange rates in a popular model of international trade : Does the 'Marshall-Lerner' condition hold?," Journal of International Economics, Elsevier, vol. 30(3-4), pages 301-316, May.
- Bahmani-Oskooee, Mohsen & Niroomand, Farhang, 1998. "Long-run price elasticities and the Marshall-Lerner condition revisited," Economics Letters, Elsevier, vol. 61(1), pages 101-109, October.
- Hafer, R.W. & Jansen, D.W., 1990.
"The Demand For Money In The United States: Evidence From Cointegration Tests,"
9010, Erasmus University of Rotterdam - Institute for Economic Research.
- Hafer, R W & Jansen, Dennis W, 1991. "The Demand for Money in the United States: Evidence from Cointegration Tests," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(2), pages 155-68, May.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Paul Krugman & Marcus Miller, 1992. "Exchange Rate Targets and Currency Bands," NBER Books, National Bureau of Economic Research, Inc, number krug92-1, July.
- Paresh Kumar Narayan, 2004. "New Zealand's trade balance: evidence of the J-curve and granger causality," Applied Economics Letters, Taylor and Francis Journals, vol. 11(6), pages 351-354.
- George S. Tavlas, 2003. "The Economics of Exchange-Rate Regimes: A Review Essay," The World Economy, Wiley Blackwell, vol. 26(8), pages 1215-1246, 08.
- Chassem, Nacisse Palissy, 2011.
"Effets de long terme du taux de change réel sur la balance commerciale nominale et réelle en zone Franc africaine
[Long-run effects of real exchange rate on the nominal and real trade balance in ," MPRA Paper 30252, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.