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The effect of exchange rate changes on trade balances in the short and long run

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  • R. Scott Hacker
  • Abdulnasser Hatemi‐J

Abstract

Using generalized impulse response functions, this study tests for the trade J‐curve for three transitional central European countries – the Czech Republic, Hungary, and Poland – in their bilateral trade with respect to Germany. Our findings suggest that for each country there are some characteristics associated with a J‐curve effect: after a (real or nominal) depreciation the export‐to‐import ratio briefly drops to below its initial value within a few months and then rises to a long run equilibrium value higher than the initial one.

Suggested Citation

  • R. Scott Hacker & Abdulnasser Hatemi‐J, 2004. "The effect of exchange rate changes on trade balances in the short and long run," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 777-799, December.
    • Handle: RePEc:bla:etrans:v:12:y:2004:i:4:p:777-799
    DOI: 10.1111/j.0967-0750.2004.00202.x
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    References listed on IDEAS

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