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Exchange rate policy and trade balance. A cointegration analysis of the argentine experience since 1962

  • Matesanz Gómez, David
  • Fugarolas Álvarez-Ude, Guadalupe

Using multivariate cointegration tests for non-stationary data and vector error correction models, this paper examines the determinants of trade balance for Argentina over the last forty to fifty years. Our investigation confirms the existence of long-run relationships among trade balance, Real Exchange Rate (RER) and foreign and domestic incomes for Argentina during different real exchange rate management policies. Based on the estimations, the Marshall-Lerner condition is examined and, by means of impulse response functions, we trace the effect of a one-time shock to the RER on the trade balance checking the J-curve pattern.

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File URL: http://mpra.ub.uni-muenchen.de/151/1/MPRA_paper_151.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 151.

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Date of creation: 2006
Date of revision: 2006
Handle: RePEc:pra:mprapa:151
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  1. Rose, Andrew K., 1990. "Exchange rates and the trade balance : Some evidence from developing countries," Economics Letters, Elsevier, vol. 34(3), pages 271-275, November.
  2. Syed Mahmud & M. Eray Yucel, 2001. "Testing Marshall-Lerner Condition : A Non-Parametric Approach," Departmental Working Papers 0102, Bilkent University, Department of Economics.
  3. James G. MacKinnon, 1995. "Numerical Distribution Functions for Unit Root and Cointegration Tests," Working Papers 918, Queen's University, Department of Economics.
  4. Christine Richaud & Aristomene Varoudakis & Marie-Ange Veganzones, 2000. "Real exchange rate and openness in emerging economies: Argentina in the long run," Applied Economics, Taylor & Francis Journals, vol. 32(1), pages 1-11.
  5. Jonathan Perraton, 2003. "Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 1-22.
  6. Paresh Kumar Narayan, 2004. "New Zealand's trade balance: evidence of the J-curve and granger causality," Applied Economics Letters, Taylor & Francis Journals, vol. 11(6), pages 351-354.
  7. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
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