The Real Exchange Rate, the Ghanaian Trade Balance, and the J-curve

Bernard Njindan Iyke and Sin-Yu Ho

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: Trade balance; J-curve; real exchange rates; nonlinearities; Ghana. (search for similar items in EconPapers)
JEL-codes: C22 F31 F32 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-afr and nep-opm
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Citations: View citations in EconPapers (13)

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Journal Article: The Real Exchange Rate, the Ghanaian Trade Balance, and the J-curve (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:78211

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