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Exchange rate policy and trade balance. A cointegration analysis of the argentine experience since 1962

David Gómez () and Guadalupe Fugarolas Álvarez-Ude ()

MPRA Paper from University Library of Munich, Germany

Abstract: Using multivariate cointegration tests for non-stationary data and vector error correction models, this paper examines the determinants of trade balance for Argentina over the last forty to fifty years. Our investigation confirms the existence of long-run relationships among trade balance, Real Exchange Rate (RER) and foreign and domestic incomes for Argentina during different real exchange rate management policies. Based on the estimations, the Marshall-Lerner condition is examined and, by means of impulse response functions, we trace the effect of a one-time shock to the RER on the trade balance checking the J-curve pattern.

Keywords: Argentina; Marshall-Lerner; J-Curve; cointegration and impulse response analysis (search for similar items in EconPapers)
JEL-codes: C22 F43 C32 F31 (search for similar items in EconPapers)
Date: 2006, Revised 2006
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-ifn and nep-int
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Journal Article: Exchange rate policy and trade balance: a cointegration analysis of the Argentine experience since 1962 (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:151

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