GTAP Resources: Resource Display
| GTAP Resource #4436 |
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"Real effective exchange rate and trade balance in Senegal: cointegration analysis and J-curve test" by Ndong, Benjamin and Maurice Ngor Diof Abstract From the theoretical point of view, the problem of the effects of exchange rate changes on the trade balance arises since the 1920s [with the work of Bickerdicke (1920) on the instability of foreign trade].Therefore, a fairly diverse literature was developed on the determinants of foreign trade. However, the conventional theory states that the policy of competitive depreciation [or competitive devaluation under a fixed exchange rate regime] is a way to rebalance and improve the trade balance of a nation. This pure theoretical intuition, known as the J-curve theory or J curve phenomenon, raised in the context of the years 1970_1980 marked by the liberalization of exchange rate policy of most of industrialized economies, economists thought about the possibilities of evaluating the effects of exchange rate changes on trade balance. From this reflection gradually arose a plethora of research aimed, with the support of econometric tools, to gauge the long-run relationship between trade balance and real effective exchange rate [Bahmani-Oskooee (1985) ; Himarios (1989) , Bahmani-Oskooee (1991; Upadhyaya and Dakal (1997) ; Onafowora (2003) , Duasa (2007) , Shahbaz and al. (2012), etc.]. These macro-econometric studies have generally reached conclusions far short of the theoretical intuition that competitive devaluation policies and competitive depreciation would be a remedy for chronic imbalances in the trade balance of a nation. Some studies confirmed the theory of J-curve, others invalidated, others concluded in the absence of a significant relationship between trade balance and exchange rate [real or effective] and other studies led to unconventional results. Senegal is a Sub Saharan Africa’s country whose population is estimated at about 13 million inhabitants according to the official statistics of the National Agency of Statistics and Demography [ANSD, SES 2011]. Since its independence, the country has embarked on wide the organization of African ... |
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- Domestic policy analysis - Africa (West) |
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Public Access  GTAP Resource 4436 (829.9 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 2:05:45 PM
