Testing Asymmetrical Effect of Exchange Rate on Saudi Service Sector Trade: A Non-linear Auto-regressive Distributive Lag Approach

Haider Mahmood (), Tarek Tawfik Yousef Alkhateeb and Tarek Tawfik Yousef Alkhateeb
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Tarek Tawfik Yousef Alkhateeb: Department of Marketing, College of Business Administration, Prince Sattam Bin Abdulaziz University, Al-Kharj, K.S.A,
Tarek Tawfik Yousef Alkhateeb: Department of Agricultural Economics, Kafr Elsheikh University, Egypt.

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 1, 73-77

Abstract: Present study explores the impact of devaluation and appreciation (negative and positive movements of exchange rate) on services sector trade by applying nonlinear auto-regressive distributive lag technique of Shin et al. (2014). This study confirms asymmetrical effects in case of all sectors in short run and long run effects may improve the trade balance of all sectors. Overall devaluation confirms existence of J-curve after some lag. This study also found that appreciation of a Saudi currency may put up adverse effects on trade balance in all services sectors except travel, construction and tourism sectors. The increase in world income may support to enhance exports of Saudi Arabia, while rise in Saudi Arabia's income may have negative effects on trade balance of all services sectors except travel and tourism.

Keywords: Devaluation; Trade; Asymmetry (search for similar items in EconPapers)
JEL-codes: D82 F14 F31 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2017-01-11

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