Is the J-Curve a Reality in Developing Countries?

M. Ershad Hussain and Mahfuzul Haque

EconStor Open Access Articles and Book Chapters, 2014, vol. 1, issue 2, 231-240

Abstract: We examine the relationship between trade balance and net export with both, the official and real effective exchange rates on the J-Curve hypothesis and find evidence to support in favor of the hypothesis, coming from a panel data of 49 developing countries from Africa. Countries can improve their current account balance by depreciating their currency; however the J-curve hypothesis argues that such changes take time to occur, but should use exchange rate policies discreetly, as it belongs to the “beggar thy neighbor” policies. This may be good for home country but is not so good for the foreign country; as a result, such policies may trigger retaliatory policies. Restrictive trade policies are against the present day notion of free-economy and free-trade policy these are very common around the world.

Keywords: J-Curve; Developing Countries; Exchange Rate; Trade and Export. (search for similar items in EconPapers)
JEL-codes: F10 F13 F14 F31 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:105852

DOI: 10.1453/jepe.v1i2.67

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