The Real Exchange Rate, the Ghanaian Trade Balance, and the J-curve
Bernard Njindan Iyke and
Sin-Yu Ho ()
Journal of African Business, 2017, vol. 18, issue 3, 380-392
Using linear and nonlinear specifications, we studied the effects of real exchange rate changes on the trade balance of Ghana during the period 1986Q1 to 2016Q3. We found no evidence in support of the short- and long-run impact of exchange rate changes on the trade balance in the linear specification. The J-curve is refuted in this case. In contrast, exchange rate changes affected the trade balance in the nonlinear specification. Depreciations improve the trade balance in the long run, but appreciations have no impact. Hence, exchange rate changes have nonlinear effects on the trade balance. This is consistent with the J-curve phenomenon.
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Working Paper: The Real Exchange Rate, the Ghanaian Trade Balance, and the J-curve (2017)
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