Determinants of the Trade Balance in India. Evidence from a Post-Liberalisation Period

Parray Waseem A. (), Suadat Wani and Yasmin Effat ()
Additional contact information
Parray Waseem A.: Department of Economics, University of Kashmir, India
Yasmin Effat: Department of Economics, University of Kashmir, India

Studia Universitatis „Vasile Goldis” Arad – Economics Series, 2022, vol. 32, issue 4, 16-37

Abstract: The present study investigates trade balance determinants in post-liberalization India from 1991 to 2020. The main aim of this study is to test the validity of the J-curve and Marshal-Lerner condition and examine the impact of other related macroeconomic variables, including foreign income, exchange rate, domestic prices, and domestic demand on the country’s trade balance. To achieve this objective, bounds tests and error correction model within asymmetric and symmetrical framework was used for estimation. In addition, variance decomposition analysis was applied to examine the dynamic interaction of selected variables. The results indicate the absence of the ‘J-curve’ effect and ‘Marshall-Lerner’ condition in India. Further, the results indicate that domestic prices, domestic demand, and money supply have negative signs, whereas exchange rate and world demand have positive signs in the long and short-run. The results from the variance decomposition indicate that as compared to other variables, the exchange rate highly contributes to forecasting error variance of trade balance in the case of India

Keywords: Trade balance; Exchange rate; J-curve; ARDL; NARDL (search for similar items in EconPapers)
JEL-codes: F34 H74 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.2478/sues-2022-0017 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:suvges:v:32:y:2022:i:4:p:16-37:n:2

DOI: 10.2478/sues-2022-0017

Access Statistics for this article

Studia Universitatis „Vasile Goldis” Arad – Economics Series is currently edited by Florin Cornel Dumiter

More articles in Studia Universitatis „Vasile Goldis” Arad – Economics Series from Sciendo
Bibliographic data for series maintained by Peter Golla ().