期刊名称：Journal of Economics and Sustainable Development
印刷版ISSN：2222-2855
电子版ISSN：2222-2855
出版年度：2014
卷号：5
期号：24
页码：185-191
语种：English
出版社：The International Institute for Science, Technology and Education (IISTE)
摘要：More recent studies have used bilateral data in testing the J curve phenomenon. However, The paper has attempted to estimate the J-curve phenomenon for Ethiopia using a yearly data ,aggregate data over the period 1974-2010 in a multilateral trade model basis. A recent technique in co integration, ARDL approach , more importantly the Hendry’s general to specific approach has been employed, which allowed for a simultaneous short-run and long-run analysis of the trade balance model. Empirical results suggest there is strong evidence for the fulfillment of the Marshall-Lerner condition, as the trade balance improves in the long run in response to a currency devaluation, while giving rise to a J-curve effect in the short run. Both Johansen’s and autoregressive distributed lag approach are respectively used. Co integration test results showing that LREERI ,LTB LRGDP and LIPI move all together in long run. Corresponding error- correction models as well as impulse response functions indicate that, following currency devaluation trade balance first deteriorates before it later improves, i.e. exhibiting the J-curve pattern. These results are relevant for policy making instruments in Ethiopia. It is likely that such policy may be able to produce the desired outcome—i.e., the trade balance could improve. The policy issue that arises from these observations is the usefulness of the real exchange rate as a tool for correcting trade imbalance. The Granger Causality test suggests that REER, LRGDP, LIPI does Granger causes trade balance. As the research works comprise two regimes, the stability analysis was checked.
