Real exchange rate effects on the balance of trade: cointegration and the Marshall-Lerner condition

2001 ◽  
Vol 6 (3) ◽  
pp. 187-200 ◽  
Author(s):  
Derick Boyd ◽  
Gugielmo Maria Caporale ◽  
Ron Smith
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Rate Effects ◽  
Balance Of Trade

scholarly journals Real exchange rate and innovation: empirical evidences

2018 ◽  
Vol 38 (2) ◽  
pp. 280-303 ◽  
Author(s):  
KEYNIS CÂNDIDO DE SOUTO ◽  
MARCO FLÁVIO CUNHA RESENDE
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Transmission Mechanism ◽  
The Real ◽  
Considerable Portion ◽  
Rate Effects ◽  
Recent Debate ◽  
The Relationship

ABSTRACT The recent debate on the determinants of the lung-run economic growth highlights the role of a competitive and stable real exchange rate to foster growth. In this debate, the works follow two approaches: theoretical and empirical. In the theoretical approach a considerable portion of the works points towards the innovation as a transmission mechanism of the real exchange rate effects on income. These works emphasize that the real exchange rate affects growth because of its impacts on the determinants of innovation, such as investment. Despite the theoretical debate, the focus of empirical works is on the analysis of the exchange rate effects on income while the relationship between exchange rate and innovation remains untapped. This article seeks to contribute to the literature by providing empirical evidence that supports the link between the real exchange rate and innovation.

scholarly journals Effect of Foreign Direct Investment, Inflation, Real Exchange Rate and Transfer Payments on Trade Deficit in Kenya

2020 ◽  
pp. 24-40
Author(s):  
Eric Oduor Ochieng ◽  
Destaings Nyongesa ◽  
Nelson Obange
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Impulse Response ◽  
Trade Deficit ◽  
Series Data ◽  
Foreign Direct Investments ◽  
Transfer Payments ◽  
The World ◽  
Short Run ◽  
Balance Of Trade

Across all the countries, the balance of trade has remained a key indicator of economic activities as it shows a country’s level of competitiveness in the world market. Economists are divided on whether a persistent trade deficit is good or bad for a developing country like Kenya. Contrary to most of the similar previous studies, this study included trade in services as well as some of the key factors affecting trade balance such as inflation and transfer payments and sought to establish the nature and strength of their connection with the trade deficit in Kenya as well as their respective impulse responses. This study adapted a reduced form of the balance of trade model by hypothesizing that balance of trade is a function of FDI, inflation, real exchange rate and transfer payments. The study embraced an ex post facto correlational research design to gauge the elements and earnestness of synergy between the variables and used time series data obtained from the World Bank ranging from the year 1978 up to the year 2014 with annual frequency. This study also employed use of descriptive statistics, Cointegration, Vector Error Correction Model, Granger causality, impulse response function tests as well as a range of other diagnostics tests. This study concluded that in the long-run, only inflation and transfer payments have positive and negative significant effects respectively on both trade deficit and also foreign direct investments through there is no respective causality. This study also established that trade deficit has positive significant short-run effects on transfer payments while real exchange rate has positive significant short-run effects on inflation though there is also no respective causality. This study found that any shocks need to be addressed within the shortest possible timeframe as the impulse response functions indicate the effects being adverse within the first few years as effects only begin to die out from the fourth year. The study therefore concluded that trade deficit is not really bad for Kenya as measures that should reduce it actually reduces foreign direct investments which are really important for a growing economy like Kenya.

scholarly journals Modelling real exchange rate effects on output performance in Latin America

2010 ◽  
Vol 42 (19) ◽  
pp. 2491-2503 ◽  
Author(s):  
Pablo Mejía-Reyes ◽  
Denise R. Osborn ◽  
Marianne Sensier
Keyword(s):  
Latin America ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Output Performance ◽  
Rate Effects
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