The relationship between the exchange rate and the trade balance in South Africa
Journal of Economic and Financial Sciences
| Field | Value | |
| Title | The relationship between the exchange rate and the trade balance in South Africa | |
| Creator | Chiloane, Lebogang Pretorius, Marinda Botha, Ilse | |
| Description | The purpose of this paper is to test the existence of the J-curve effect and to show whether the Marshall–Lerner condition holds in the South African manufacturing sector. Using quarterly data from 1995 to 2010, the study uses the vector error correction modelling technique as well as impulse response functions to attain the research objectives. The results show that a long-run equilibrium relationship exists between the manufacturing trade balance and the three explanatory variables: real effective exchange rate, real domestic and foreign income levels. Overall, the results show that a depreciation in the domestic currency results in a deterioration in the manufacturing trade balance in the short run, and that this is followed by an improvement in the long run. The study finds evidence of the existence of the J-curve in the South African manufacturing sector. The long-run dynamics suggest that the Marshall–Lerner condition holds. | |
| Publisher | AOSIS | |
| Date | 2014-07-31 | |
| Identifier | 10.4102/jef.v7i2.142 | |
| Source | Journal of Economic and Financial Sciences; Vol 7, No 2 (2014); 299-314 2312-2803 1995-7076 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://jefjournal.org.za/index.php/jef/article/view/142/138
|
|
ADVERTISEMENT
