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

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  • Bernard Njindan Iyke
  • Sin-Yu Ho

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.

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  • Bernard Njindan Iyke & Sin-Yu Ho, 2017. "The Real Exchange Rate, the Ghanaian Trade Balance, and the J-curve," Journal of African Business, Taylor & Francis Journals, vol. 18(3), pages 380-392, July.
    • Handle: RePEc:taf:wjabxx:v:18:y:2017:i:3:p:380-392
    DOI: 10.1080/15228916.2017.1315706
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    Cited by:

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    3. Linda Akoto & Daniel Sakyi, 2019. "Empirical Analysis of the Determinants of Trade Balance in Post-liberalization Ghana," Foreign Trade Review, , vol. 54(3), pages 177-205, August.
    4. Bernard Njindan Iyke & Sin-Yu Ho, 2019. "Inflation, Inflation Uncertainty, and Growth: Evidence from Ghana," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(2), June.
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    6. Bernard Njindan Iyke & Sin-Yu Ho, 2017. "Exchange rate uncertainty and domestic investment in Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1362157-136, January.
    7. Samuel OSEI-GYEBI, 2021. "How Exchange Rate Changes Affect Trade Balance in Ghana," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 5(2), pages 43-62.
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    9. Folorunsho M. Ajide & James T. Dada, 2023. "Poverty, entrepreneurship, and economic growth in Africa," Poverty & Public Policy, John Wiley & Sons, vol. 15(2), pages 199-226, June.
    10. Udi Joshua & Oladimeji M. Salami & Andrew A. Alola, 2020. "Toward the path of Economic Expansion in Nigeria: The Role of Trade Globalization," Working Papers 20/009, European Xtramile Centre of African Studies (EXCAS).

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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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