Does Exchange Rate Influence Trade Balance in Nigeria (1986-2022)?

The Impact of Exchange Rate Movements on Trade Balance between Vietnam and Japan: J Curve Effect Test

Exchange Rate Policy and Macroeconomic Stability in Vietnam

The essence of the modern asset‐market approach to the analysis of exchange rate behavior includes the role of the trade balance account. We examine the relationship between exchange rate changes and US trade balance announcements. Statistically significant exchange rate adjustments to these announcements are documented using for the first time the comparison period approach to testing the significance of trade balance announcements on exchange rates. The evidence is consistent with the predictions of the modern asset‐market exchange rate model. There is also evidence that the foreign exchange market is more sensitive to increasing rather than decreasing trade balance deficit announcements. To date, a number of theoretical papers have investigated the possible sources of the exchange rate determination process (see, Dornbusch [1976,1980], Dornbusch and Fisher [1980], Frenkel [1976, 1981], Kouri [1976], and Mussa [1982], among others). There is no consensus on how exchange rates are determined and why they...

La balance commerciale, les termes de l'échange et la croissance économique

International trade in the economy of each country has a very important role in improving world welfare. Because it can be said that there is not a single country in the world that does not conduct international trade. The method used in this study is a quantitative method, and the overall data used in this study is secondary data obtained from the results of systematic recording in the form of time series data from years obtained from the Central Statistics Agency (BPS) of Lampung province. The data were analyzed using multiple linear regression. (F-statistic) of -0.825468 is smaller than the significance level of 0, 05 so that it can be concluded that the estimated regression model is feasible to explain the effect of net exports, investment, labor and exchange rates on the dependent variable, namely economic growth. Based on the results of the calculation of the determination test, the value of R Square is 0.3549, this shows that the percentage of the contribution given from the independent variables, namely net exports, investment, labor and exchange rates to the dependent variable of economic growth is 35.49% while the remaining 64.51% is influenced by by other variables not explained in the study. Based on the results of the data analysis, the conclusion in this study is that net exports, investment, labor and the exchange rate have a very important influence in increasing Indonesia's economic growth. labor and exchange rate on the dependent variable, namely economic growth. Based on the results of the calculation of the determination test, the value of R Square is 0.3549, this shows that the percentage of the contribution given from the independent variables, namely net exports, investment, labor and exchange rates to the dependent variable of economic growth is 35.49% while the remaining 64.51% is influenced by by other variables not explained in the study. Based on the results of the data analysis, the conclusion in this study is that net exports, investment, labor and the exchange rate have a very important influence in increasing Indonesia's economic growth. labor and exchange rate on the dependent variable, namely economic growth. Based on the results of the calculation of the determination test, the value of R Square is 0.3549, this shows that the percentage of the contribution given from the independent variables, namely net exports, investment, labor and exchange rates to the dependent variable of economic growth is 35.49% while the remaining 64.51% is influenced by by other variables not explained in the study. Based on the results of the data analysis, the conclusion in this study is that net exports, investment, labor and the exchange rate have a very important influence in increasing Indonesia's economic growth. 3549 this shows that the percentage of contributions given from the independent variables, namely net exports, investment, labor and the exchange rate to the dependent variable of economic growth is 35.49% while the remaining 64.51% is influenced by other variables not explained in the study. Based on the results of the data analysis, the conclusion in this study is that net exports, investment, labor and the exchange rate have a very important influence in increasing Indonesia's economic growth. 3549 this shows that the percentage of contributions given from the independent variables, namely net exports, investment, labor and the exchange rate to the dependent variable of economic growth is 35.49% while the remaining 64.51% is influenced by other variables not explained in the study. Based on the results of the data analysis, the conclusion in this study is that net exports, investment, labor and the exchange rate have a very important influence in increasing Indonesia's economic growth.

This research focuses on investigating the dynamic network among trade balance (TB), the Gross national saving rate (GNSR), and the exchange rate (ER) in Japan. The study used time series data from 1981 to 2019. The research conducts a vector auto-regression (VAR) to investigate the dynamic relationship in the series. The first step started with a unit root test to check the stationarity. The data series is stationary at first difference. Further, we employed Johansen co-integrated analysis, Granger causality, an impulse variance analysis followed by variance decomposition. The result shows the unidirectional Granger causal relationship between TB and ER. Its own shock explains that TB’s contribution is 73% and GNSR & ER contributes 25.67 and 0.67 to TB, respectively. The GNSR variance decomposition describes 95.12 variations by its own innovative shock, and ER shows a 52% change in the variable from its own shock. This study establishes that trade balance is significant to exchange rate growth in Japan. This research is original work, and it will contribute the knowledge about the trade balance, gross national saving rate, and exchange rate behaviour & effect to each other. This research focuses on investigating the dynamic network among trade balance (TB), the Gross national saving rate (GNSR), and the exchange rate (ER) in Japan. The study used time series data from 1981 to 2019. The research conducts a vector auto-regression (VAR) to investigate the dynamic relationship in the series. The first step started with a unit root test to check the stationarity. The data series is stationary at first difference. Further, we employed Johansen co-integrated analysis, Granger causality, an impulse variance analysis followed by variance decomposition. The result shows the unidirectional Granger causal relationship between TB and ER. Its own shock explains that TB’s contribution is 73% and GNSR & ER contributes 25.67 and 0.67 to TB, respectively. The GNSR variance decomposition describes 95.12 variations by its own innovative shock, and ER shows a 52% change in the variable from its own shock. This study establishes that trade balance is significant to exchange rate growth in Japan. This research is original work, and it will contribute the knowledge about the trade balance, gross national saving rate, and exchange rate behaviour & effect to each other.

Ethiopia has persistently pursued exchange rate devaluations to address its trade deficit and the structure of the economy, a strategy supported by the United Nations and economists. However, the effectiveness of this policy shift has sparked prolonged debate among scholars, exacerbated by divergent findings regarding the effect of exchange rates on trade balances. This study investigates the asymmetric effect of the real exchange rate on Ethiopia's trade balance from 1992 to 2022. Employing the Non-linear Autoregressive Distributed Lag Model (NARDL), the research challenges the prevalent assumption of a linear (symmetric) association between exchange rates and trade balances in Ethiopian studies. Results reveal asymmetric effects of the exchange rate on the trade balance in both the short and long run, suggesting that exchange rate depreciations have varying implications for trade balances compared to appreciations of similar magnitude. Both real exchange rate depreciation and appreciation demonstrate statistically significant and positively asymmetric effects on Ethiopia's trade balance across temporal dimensions. Specifically, a 1% exchange rate depreciation corresponds to a 0.843% and 0.856% improvement in the long-run and short-run trade balance, respectively. Furthermore, a 1% appreciation of the exchange rate is associated with a 15.079% and 15.02% enhancement of the long-run and short-run trade balance, respectively. The study underscores the importance of considering non-linear models of asymmetries in policymaking to inform more effective interventions.

Abstract
 
 This study is to determine the extent to which the independent variable factors (GDP, Inflation, Exchange and Interest Rates) affect the dependent variable (Trade Balance) in the last 20 years. Quantitative research aims to obtain empirical evidence regarding the effect of the variables of GDP, Inflation, Exchange Rates and Interest Rates on the Trade Balance, and also to test hypotheses to strengthen or even reject the hypothesis. With the following results: GDP has a negative and insignificant effect on the Trade Balance, Inflation has a negative and significant effect on the Trade Balance, the Exchange Rate has no and no significant effect on the Trade Balance, Interest Rates have no and no significant effect on the Trade Balance and GDP, INflation , Exchange and Interest Rates together (simultaneously) have a significant and significant effect on the Trade Balance

In this research, we investigate the dynamic relationship between the trade balance and exchange rate in the case of India using threshold cointegration and an asymmetric error-correction model. Empirical results validate that the long-run dynamic relationship between the trade balance and exchange rates is asymmetric. In the short run, the trade balance responds only due to positive deviations in the exchange rate. In contrast, in the exchange rate model, the exchange rate reacts only due to negative deviations in the trade balance. In addition, the results exhibit that the adjustment following variation in the exchange rate seems higher than the adjustment in the trade balance in the short run. Besides, the results indicate that the speed of adjustment due to the positive and negative shocks differs in the trade balance and the exchange rate models. Further, the uni- directional Granger causality result suggests that the trade balance substantially affects the exchange rate. However, the Granger causality effect of the exchange rate on the trade balance seems minimal. Finally, our results validate the impact of momentum equilibrium adjustment path asymmetric effects between the trade balance and exchange rate, indicating that the adjustment path is asymmetric in the long run. Therefore, policy planners in India should consider the asymmetric adjustment between these two drivers to overcome trade balance discrepancies in the short and long run. JEL Codes: F40, F41, C22, C32, C12

Purpose This paper aims to investigate asymmetric long-run effects of bilateral exchange rate on US trade imbalances with China and to examine if the effects are the same under China’s fixed and managed floating exchange rate systems. Design/methodology/approach The authors estimate both linear autoregressive distributed lag (ARDL) model assuming symmetric effect and nonlinear ARDL model assuming asymmetric effect of exchange rate on US trade deficit with China. The authors use data from 1994Q1 to 2005Q2 (under Chinese fixed exchange rate system), from 2005Q3 to 2021Q3 (under Chinese managed floating exchange rate regime), and from 1994Q1 to 2021Q3 (overall data). Findings The Chow test indicates 2005Q3 is a structure break point. Further, the results suggest the effects of bilateral exchange rate on US trade deficit with China are not the same under different exchange rate systems. The asymmetric long-run effect of bilateral exchange rate does exist. The results also demonstrate the depreciation of Chinese currency will not significantly affect US trade imbalances with China. Research limitations/implications Based on the results, the Chinese Government should embrace a more transparent and flexible exchange rate system. It will not significantly hurt Chinese trade balance, but it will help to reduce the tension between the USA and China. Originality/value All previous literature (except two papers) related to the effect of Chinese exchange rate on US trade deficit with China assume the effect is symmetric, and all (except one) use data under different Chinese exchange rate systems. To the best of the authors’ knowledge, this is the first paper that studies the possible asymmetric long-run effect of bilateral exchange rate under different Chinese exchange rate regimes.

‘Dog Days’ Full Employment without Depreciation: Can It Be Done?

The significant changes in the exchange rate play a key role in increasing the risks faced by importers and exporters; this has a significant impact on the economic policies of the state. Therefore, the study used the analytical method to clarify the effect of the exchange rate on the balance of trade in Egypt during the period (1986 – 2017), how reach to balance in exchange rate and balance of trade, focusing on studying exchange rate and balance of trade and clarify the influence of first on the second, and knowing the changes that happen in exports and imports which results from the changes that happen in Egyptian exchange rate system. This study reaches to the following results: There is negative relation between exchange rate and exports. This means that the more exchange rate is, the less exports are. And this influence negatively on balance of payment which leads to deficit and when the verse happens there is surplus in balance of trade. There is negative relation between imports and exchange rate; this is in contrast with the natural relation between imports and exchange rate because of other factor which influence on imports. This negative relation exists in case of luxury goods which is opposite of public role which provided that “There is positive relation between imports and exchange rate” and this happens in case of essential goods like wheat. Exchange rate influence on balance of trade.

Our study focuses on the analysis of the main determinants which have an effect on trade and current account balance. We empirically investigate the effect of money supply (M2), real exchange rate, income, inflation, investment, and house-hold consumption expenditure on the trade and current account balance of WAEMU for the period 1980-2013. The examination of monetary and absorption approaches to the balance of payments motivate the inclusion of income and money supply (M2). The conventional approach of elasticity motivates usage of exchange rates. We adopt the panel VAR method which additionally includes a simulation of variance decompositions and impulse response functions for transmission of shocks and further deductions. The study found a negative and statistically significant effect of money supply, household consumption expenditure on trade Balance. We found also a significant and positive effect of real exchange rate, income, inflation, and investment on the trade balance. A significant and negative relationship between money supply, investment and current account balance was established. The effect of real exchange rate, income, inflation, and household consumption expenditure on the current account balance was found to be positive and significant as well. The significance of exchange rate effect on the trade balance suggests that the Marshall-Lerner condition hold for WAEMU.

This study examines the effect of exchange rates on Kenya’s trade balances with principal trading partners in the period 1975-2013. The analysis confirms the asymmetric effect of the exchange rate on Kenya’s trade balance with her trading partners; establishing the presence of asymmetries in the short run as well as in the long run. Estimations from the NARDL model indicate that Kenya’s trade balances with trading partners respond more to exchange rate movements when the currency is depreciating and less when the currency is appreciating. It is found that depreciations mainly exert adverse effects on Kenya’s trade balance with trading partners in the long run, a finding supported by previous studies which indicated low price elasticities in trade. Policy wise, it would be counterproductive to pursue a policy of depreciating the currency in the face of deteriorating trade balance as such a move would most likely compound the external imbalance.

Purpose: The main objective of this paper is to empirically identify the impact of exchange rate volatility on the trade balance in Albania. This paper analyzes the relationship that exists between the trade balance and the exchange rate. In addition, other macroeconomic factors with an impact on the trade balance are analyzed, such as economic growth, the basic interest rate, foreign direct investments and remittances. Methodology: The method used is the empirical method in presenting data and the performance of macroeconomic factors and the econometric method to study the relationship between the exchange rate and the trade balance. The study uses data obtained from INSTAT, the World Bank and other sources for the period 2002- 2023. To estimate the regression results and estimation procedures for time series parameters, the VAR Model is used, using data on the trade balance, the euro/lek exchange rate, foreign direct investments, economic growth and remittances. Findings: The results of this study show that there is a weak relationship between the exchange rate and the trade balance. Value: Also, the paper contributes to the existing literature on the relationship between exchange rate and trade balance during the period 2002-2023 in Albania. The findings can be used by businesses and stakeholders as a tool that helps them make the necessary assessments regarding the risks of the exchange rate and the impact on their businesses. Keywords: exchange rate, trade balance, FDI, remittances, VAR model.