The Effects of Real Exchange Rate on Trade Balance in Cote d’Ivoire: Evidence from the Cointegration Analysis and Error-Correction Models
This 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.
|Date of creation:||02 Apr 2010|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
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.:
- 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.
- 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.
- Wong Hock Tsen, 2006. "Is there a long-run relationship between trade balance and terms of trade? The case of Malaysia," Applied Economics Letters, Taylor & Francis Journals, vol. 13(5), pages 307-311.
- Paul Krugman & Marcus Miller, 1992. "Exchange Rate Targets and Currency Bands," NBER Books, National Bureau of Economic Research, Inc, number krug92-1, Enero.
- 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.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
- 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.
- 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.
- 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.
- Frankel, Jeffrey A., 1996. "Recent Exchange Rate Experience and Proposals for Reform," Center for International and Development Economics Research (CIDER) Working Papers 233422, University of California-Berkeley, Department of Economics.
- 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.
- Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
- Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
- 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.
- 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.
- 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.
- Hafer, R.W. & Jansen, D.W., 1990. "The Demand For Money In The United States: Evidence From Cointegration Tests," Papers 9010, Erasmus University of Rotterdam - Institute for Economic Research.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:21810. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.