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J-Curve Dynamics and the Marshall-Lerner Condition: Evidence from Azerbaijan

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  • Jamilov, Rustam

Abstract

This paper seeks empirical evidence for the J-curve and the Marshal-Lerner condition for Azerbaijan. The results suggest that a real depreciation of the Azerbaijani Manat would cause a decline in the balance of trade in the short-run and an increase in the long-run. When including the prices of exports and imports into the analysis, the robustness test shows that the terms of trade ratio diminishes following the devaluation and does not return to its pre-depreciation level in the long-run, while the balance of trade continues to improve. This points at the presence of an underlying volume effect as the key driver of the trade balance growth. Overall, the results of this study suggest a fulfillment of the Marshall-Lerner condition criteria, indicate the existence of the J-curve, and the price and volume effects.

Suggested Citation

  • Jamilov, Rustam, 2011. "J-Curve Dynamics and the Marshall-Lerner Condition: Evidence from Azerbaijan," MPRA Paper 36799, University Library of Munich, Germany, revised Feb 2012.
    • Handle: RePEc:pra:mprapa:36799
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Salah A. Nusair, 2017. "The J-Curve phenomenon in European transition economies: A nonlinear ARDL approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(1), pages 1-27, January.
    2. Mohsen Bahmani-Oskooee & Salman Huseynov & Rustam Jamilov, 2014. "Is there a J-curve for Azerbaijan? New evidence from industry-level analysis," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 7(1), pages 83-98, March.
    3. Mohsen Bahmani-Oskooee & Rustam Jamilov, 2014. "Export diversification and the S-curve effect in a resource-rich state: evidence from Azerbaijan," Economic Change and Restructuring, Springer, vol. 47(2), pages 135-154, May.
    4. Safet Kurtovic & Blerim Halili & Nehat Maxhuni, 2017. "Bilateral Trade Elasticity of Serbia: Is There a J-Curve Effect?," PSL Quarterly Review, Economia civile, vol. 70(281), pages 185-210.
    5. Peguero, Anadel G. & Cruz-Rodríguez, Alexis, 2016. "Condición Marshall-Lerner y el efecto Curva J: Evidencias para la República Dominicana [Marshall-Lerner Condition and J-Curve Effect: Evidence for the Dominican Republic]," MPRA Paper 71535, University Library of Munich, Germany.
    6. Jamilov, Rustam, 2012. "Channels of Monetary Transmission in the CIS," MPRA Paper 39568, University Library of Munich, Germany.
    7. Jamilov, Rustam, 2012. "Is There a J-curve for Azerbaijan? Evidence from Industry-Level Analysis," MPRA Paper 39370, University Library of Munich, Germany.

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    More about this item

    Keywords

    Marshall-Lerner condition; Azerbaijan; J-curve; real depreciation; Manat; export and import price;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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