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Does the J-curve hypothesis hold for a small open economy? Evidence from time-varying coefficients of a distributed-lag model for Tunisia

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  • Mehdi Jelassi, Mohamed
  • Trabelsi, Jamel
  • Turki, Maryem

Abstract

This paper determines how the Tunisian trade balance reacts to exchange rate changes during the post liberalization period, 1993:01 to 2014:03. To achieve this, a state space specification technique is employed to estimate a trade balance model for Tunisia. Our findings suggest that the real effective exchange rate has a significant impact on the trade balance of Tunisia, showing oscillating effects that can be best described by a “W-curve.”

Suggested Citation

  • Mehdi Jelassi, Mohamed & Trabelsi, Jamel & Turki, Maryem, 2017. "Does the J-curve hypothesis hold for a small open economy? Evidence from time-varying coefficients of a distributed-lag model for Tunisia," International Economics, Elsevier, vol. 152(C), pages 107-115.
    • Handle: RePEc:eee:inteco:v:152:y:2017:i:c:p:107-115
    DOI: 10.1016/j.inteco.2017.06.002
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    Cited by:

    1. Sy-Hoa Ho & Jamel Saadaoui, 2021. "Symmetric and asymmetric effects of exchange rates on money demand: empirical evidence from Vietnam," Applied Economics, Taylor & Francis Journals, vol. 53(34), pages 3948-3961, July.
    2. Sy Hoa Ho & Jamel Saadaoui, 2019. "Symmetric and asymmetric effects of exchange rates on money demand: Empirical evidence from Vietnam," Working Papers hal-02421007, HAL.
    3. Jalil Khodaparast Shirazi & Vahid Mohamad Taghvaee & Mohamad Nasiri & Abbas Assari Arani, 2020. "Sustainable development and openness in oil-exporting countries: green growth and brown growth," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-19, December.

    More about this item

    Keywords

    Trade balance; Effective real exchange rate; J- curve; Kalman Filter;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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