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Impact of Devaluation on Foreign Trade in Saudi Arabia

Author

Listed:
  • Mahmood, Haider
  • Alkhateeb, Tarek Tawfik Yousef
  • Ahmad, Nawaz

Abstract

International policy is always aims at the balance trade improvement of any country. This paper specifically investigates the influence of devaluation policy on the trade balance in Saudi Arabia by using data of 1970-2015 through non-linear ARDL approach suggested by Shin et al. (2014). The findings suggest that world income is improving trade balance of Saudi Arabia. While, appreciation has expected impacts at large and devaluation is not found effective in for improvement in trade balance in long run. Further, short run results prove the existence of inverted J-curve in appreciation policy and S-curve in devaluation policy. This paper suggests to maintain exchange rate instead of a devaluation based on findings.

Suggested Citation

  • Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmad, Nawaz, 2017. "Impact of Devaluation on Foreign Trade in Saudi Arabia," MPRA Paper 109452, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109452
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    References listed on IDEAS

    as
    1. Mahmood, Haider & Alkhateeb, Tarek Tawfik, 2017. "An Estimation of Service Quality in King Khalid Hospital, Saudi Arabia," MPRA Paper 109453, University Library of Munich, Germany.
    2. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Trade Openness and Employment Nexus in Saudi Arabia," MPRA Paper 109451, University Library of Munich, Germany.
    3. Sehrish Liaquat & Haider Mahmood, 2017. "Electricity consumption and economic growth in Pakistan: menace of circular debt," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 13(3), pages 227-245.
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    5. Haider Mahmood & Mohammad Asif, 2016. "An empirical investigation of stability of money demand for GCC countries," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(3), pages 274-286.
    6. Mahmood, Haider, 2016. "Testing Fiscal Sustainability under the Inter-Temporal Budget Constraint in Saudi Arabia," MPRA Paper 109458, University Library of Munich, Germany.
    7. Mahmood, Haider, 2016. "Determinants of Bilateral FDI Inflows in Pakistan from Major Investing Countries: A Dynamic Panel Approach," MPRA Paper 109456, University Library of Munich, Germany.
    8. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmed, Nawaz, 2017. "Impact of devaluation on Saudi oil exports: The J-Curve analysis," MPRA Paper 109454, University Library of Munich, Germany.
    9. Robin C. Sickles & William C. Horrace (ed.), 2014. "Festschrift in Honor of Peter Schmidt," Springer Books, Springer, edition 127, number 978-1-4899-8008-3, December.
    10. Bahmani-Oskooee, Mohsen, 1991. "Is there a long-run relation between the trade balance and the real effective exchange rate of LDCs?," Economics Letters, Elsevier, vol. 36(4), pages 403-407, August.
    11. Marius Cristea & Stefana A. D. Varvari & József Benedek, 2012. "Pros and cons of foreign direct investments on local economy," Eszak-magyarorszagi Strategiai Fuzetek, Faculty of Economics, University of Miskolc, vol. 9(2), pages 20-34.
    12. Kanta Marwah & Lawrence R. Klein, 1996. "Estimation of J-Curves: United States and Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 523-539, August.
    13. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Financial Market Development and Employment Nexus in Saudi Arabia," MPRA Paper 109450, University Library of Munich, Germany.
    14. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad, 2016. "The Relationship between Exports and Economic Growth in Saudi Arabia," MPRA Paper 109459, University Library of Munich, Germany.
    15. repec:asi:ajoerj:2012:p:84-91 is not listed on IDEAS
    16. Adnan Habib & Jamshaid Rehman & Tasneem Zafar & Haider Mahmood, 2016. "Does sustainability hypothesis hold in developed countries? A panel co-integration analysis," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(1), pages 1-25, January.
    17. Jai S. Mah, 2012. "Foreign direct investment, labour unionization and income inequality of Korea," Applied Economics Letters, Taylor & Francis Journals, vol. 19(15), pages 1521-1524, October.
    18. Tarek Tawfik Yousef Alkhateeb & Haider Mahmood & Zafar Ahmad Sultan, 2016. "The Relationship between Exports and Economic Growth in Saudi Arabia," Asian Social Science, Canadian Center of Science and Education, vol. 12(4), pages 117-117, April.
    19. Mahmood, Haider, 2016. "Revisiting Money Demand Function for GCC Countries and Testing its Stability," MPRA Paper 109457, University Library of Munich, Germany.
    20. Haider Mahmood & Tarek Tawfik Yousef Alkhateeb, 2017. "Trade and Environment Nexus in Saudi Arabia: An Environmental Kuznets Curve Hypothesis," International Journal of Energy Economics and Policy, Econjournals, vol. 7(5), pages 291-295.
    21. Alkhateeb, Tarek Tawfik Yousef & Alkahtani, Nasser Saad & Mahmood, Haider, 2017. "Assessing the Role of Foreign Labour on Saudi Labour Unemployment in Saudi Arabia," MPRA Paper 109449, University Library of Munich, Germany.
    22. Ahmad, Khalil & Mahmood, Haider, 2013. "Openness-Inflation Puzzle: Evidence from Pakistan," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 36(3), pages 69-78, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Mahmood, Haider & Chaudhary, A. R., 2013. "Impact of FDI on Income Inequality in Pakistan," MPRA Paper 109460, University Library of Munich, Germany.
    2. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Trade Openness and Employment Nexus in Saudi Arabia," MPRA Paper 109451, University Library of Munich, Germany.
    3. Al-Qahtani, Maleeha Mohammed Zaaf & Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Abdalla, Manal Abdalla Zahed & Mawad, Ghada Shihata Ebrahim & Alkhatib, Maha Ahmed Hussein, 2020. "Exploring the Level of Managerial, Political, Academic, Economic and Social Women Empowerment in Saudi Arabia," MPRA Paper 109447, University Library of Munich, Germany.
    4. Alkhateeb, Tarek Tawfik Yousef & Alkahtani, Nasser Saad & Mahmood, Haider, 2017. "Assessing the Role of Foreign Labour on Saudi Labour Unemployment in Saudi Arabia," MPRA Paper 109449, University Library of Munich, Germany.
    5. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmed, Nawaz, 2017. "Impact of devaluation on Saudi oil exports: The J-Curve analysis," MPRA Paper 109454, University Library of Munich, Germany.
    6. Alkhateeb, Tarek Tawfik Yousef & Mahmood, Haider & Sultan, Zafar Ahmad & Ahmad, Nawaz, 2017. "Financial Market Development and Employment Nexus in Saudi Arabia," MPRA Paper 109450, University Library of Munich, Germany.
    7. Mahmood, Haider, 2018. "An Investigation of Macroeconomic Determinants of FDI Inflows in Bangladesh," MPRA Paper 109448, University Library of Munich, Germany.
    8. Mahmood, Haider & Alkhateeb, Tarek Tawfik, 2017. "An Estimation of Service Quality in King Khalid Hospital, Saudi Arabia," MPRA Paper 109453, University Library of Munich, Germany.
    9. Mahmood, Haider & Alkhateeb, Tarek Tawfik Yousef & Ahmed, Nawaz, 2017. "Impact of Devaluation on Industrial Exports in Saudi Arabia: J-Curve Hypothesis," MPRA Paper 109455, University Library of Munich, Germany.

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    More about this item

    Keywords

    Key Words: J-Curve; Devaluation; Trade Balance;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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