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Real Exchange Rate Changes and the Trade Balance: The Evidence from Pakistan
| Content Provider | Scilit |
|---|---|
| Author | Shahbaz, Muhammad Jalil, Abdul Islam, Faridul |
| Copyright Year | 2012 |
| Description | This study uses quarterly data from July 1980 to June 2006 to explore the relationship between changes in real exchange rate and the trade balance of Pakistan. Applying the Auto Regressive Distributed Lag (ARDL) approach to cointegration, we examine the existence of a possible long-run relationship. We find the following: (1) a long-run relationship between the series exists, and (2) the coefficient of elasticity is negative and statistically significant, which does not support for the J-relation. Given this, the policymakers should take a conservative approach in using currency devaluation to cure the fundamental disequilibrium in the balance of payments. It is likely that such policy may not produce the desired outcome—i.e., the trade balance may not improve. |
| Related Links | https://core.ac.uk/download/pdf/12026595.pdf |
| Ending Page | 153 |
| Page Count | 15 |
| Starting Page | 139 |
| ISSN | 08853908 |
| e-ISSN | 15210545 |
| DOI | 10.1080/08853908.2012.657588 |
| Journal | The International Trade Journal |
| Issue Number | 2 |
| Volume Number | 26 |
| Language | English |
| Publisher | Informa UK Limited |
| Publisher Date | 2012-03-28 |
| Access Restriction | Open |
| Subject Keyword | Journal: The International Trade Journal Development Studies Devaluation Trade Balance Cointegration Pakistan |
| Content Type | Text |
| Resource Type | Article |
| Subject | Business and International Management Economics, Econometrics and Finance |
