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THE IMPACT OF EXCHANGE RATE CHANGES ON TRADE BALANCE
(SRI LANKAN EXPERIENCE 1977-2010)
A Research Proposal
Submitted in Partial Fulfillment of the Requirements of the
BACHELOR OF ARTSSPECIAL DEGREE IN ECONOMICS
2011/12
Department of Economics & StatisticsFaculty of Arts
University of PeradeniyaSri Lanka
Name of Supervisor: Mr. S.Sivarajasingham
Student Registration number: A / 07 / 268 Date: 16 / 03 / 2012Name: H.M.A.T.Koswaththa.
Signature of Head of the Department: Date:
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Table of Contents
1. INTRODUCTION..............................................................................................................1
1.1. Background of The Study............................................................................................1
1.2. Behaviour of The Variables.........................................................................................3
2. LITERATURE REVIEW...................................................................................................4
2.1. Empirical Studies in Sri Lanka....................................................................................4
2.2. Empirical Studies in Other Countries..........................................................................5
2.3. Research Gap.............................................................................................................10
3. PROPOSED RESEARCH...............................................................................................11
3.1. Research Problem......................................................................................................11
3.2. Hypothesis.................................................................................................................12
3.3. Objectives of the Study.............................................................................................12
3.4. Importance of the Study............................................................................................13
4. METHODOLOGY...........................................................................................................14
4.1. Main Variables..........................................................................................................14
4.2. Frequency, Source of Data and Study Period............................................................16
4.4. The Model.................................................................................................................17
4.5. Econometric Tools.....................................................................................................18
REFERENCES.........................................................................................................................20
APPENDICES..........................................................................................................................22
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1. INTRODUCTION
This fragment provides an initiation to the research problem and gives a distinctive
impression to the behavior of the exchange rate and the trade balance.
1.1. BACKGROUND OF THE STUDY
It is proposed to launch this study to investigate the exchange rate* behavior on trade
balance in Sri Lanka by using its 10 major trading partners. These partner countries are
selected by calculating the trade share. They are; USA, India, UK, Singapore, Japan,
Germany, Hong Kong, Iran, China and Saudi Arabia. Considering these countries the
effective exchange rates are calculated.
The exchange rate is one of the most important policy variables, which determines the
trade flows, capital flows, inflation, international reserve and remittance of an economy.
Exchange rate is the value of one currency in terms of another currency. The exchange
rate fluctuations can be seen in the floating exchange rate regimes and managed floating
exchange rate regimes. Sri Lanka is experienced depreciation except few years. The
factors which are affecting to the exchange rate movements are relative interest rate,
relative inflation level, relative income levels and etc. If we consider the Sri Lankan
situation at the independence a fixed exchange rate regime was operated linked to the
Sterling Pound. And Since 1950s the exchange rate was fixed. The direct regulations
were imposed on foreign trade by the socialist government in 1970-977. And the trade
liberalization in 1997 leads the country to follow a flexible exchange rate system. The
rupee has continuously depreciated except the years 2005, 2008 and 2010.
The dependent variable, trade balance** can be defined as the difference between
exports and the imports. This is also known as the Net Exports (NX). This trade balance
is a component of the Balance of Payments of a country.
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*Exchange Rate: value of one currency in terms of another currency. **Trade Balance: The difference between the monetary values of exports and imports.
There are two major accounts in the Balance of Payments*. Those are Current Account**
and the Capital Account. The Trade Balance will be the first quarter of the current
account and it only records the exports and the imports. The trade balance can be
negative, positive or zero. Negative trade balance is occurred, when the imports exceed
the exports. And when the exports are greater than the imports there will be a trade
surplus. Trade Balance will be balanced when the exports are exactly equal to the
imports. In Sri Lanka, after 1977 the deficit was grown and it was filled by heavy
borrowings. It is said that the Sri Lanka’s Balance of trade in a Chronic deficit all over the
period.
The relationship between these variables is generally measured using the behavior of
the Real Exchange Rate (RER) in terms of bi-lateral trade and Real Effective Exchange
Rate (REER) in multi-lateral trade and the impact is measured by some specific analytical
tools. Although there are number of other criterion used to measure the impact of
exchange rate on trade balance, to fill the research gap, it is proposed to use mainly the
Granger Causality Test in this research.
As a specific objective of this study it is proposed to investigate the validity of
Marshal-Learner Condition in Sri Lanka. According to the M-L condition, A depreciation
of a country’s currency will improve the current account balance if the sum of the price
elasticity of domestic and foreign demands for imports is larger than unity.
(Ie + Xe) >1
Ie Import Elasticity
Xe Export Elasticity
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*Balance of payments: are the accounts which record foreign transactions systematically. **Current Account: shows all the flows that directly affect the national income.
1.2. BEHAVIOR OF THE VARIABLES
Behavior of the main variables over 33 years (1977-2010) reflected by the below graphs.
The Exchange Rate Behavior of Sri Lanka’s major trading partners against LKR
1 4 7 10 13 16 19 22 25 28 310
10
20
30
40
50
60
70
80
90
100
USAIND RSJAPANUKSINGAPOREGERMANYHONGKONGIRANCHINASAUDHI ARABIA
Sri Lanka’s Trade Balance Behavior
1 4 7 10 13 16 19 22 25 28 31 34
-10000
-5000
0
5000
10000
15000
20000
EXPORTSIMPORTSTrade Balance
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According to the literature there is a considerable relationship between these two
variables in Sri Lanka. Depreciation has been instrumental in making a favorable impact
on the trade balance (Wijesinghe 1988). And also Silva & Zen (1998) found that the
exchange rate policy after 1977 has improved the trade balance but has failed to stimulate
real output at least in the short run. These things are widely discussed under the literature
review.
2. LITERATURE REVIEW.
2.1. EMPIRICAL STUDIES IN SRI LANKA.
According to De Silva D.G. and Zen Zhu (1998), the changes in Sri Lanka’s
Trade Balance affected by changes in the exchange rate since 1977. This study has
shown that it is impossible to detect any positive effect on GDP in Sri Lanka due to
currency depreciation*. The study period was 1977-1997.VAR Analysis has been used to
identify shocks and fully control important external shocks that affect economic
performance. There were two exogenous variables used as Government Expenditure and
Foreign Direct Investment. And endogenous variables were GDP, Trade Balance,
Nominal Interest Rate and CPI. The Co integration model was estimated, which
comprised of four endogenous variables (GDP, Trade Balance, CPI, Real Exchange
Rate). Then by adding one variable at a time, the study re estimated the model and
investigates the effects of exchange rate on Trade Balance and GDP. And also allowed
for determination of the stability of the results.
Wijesinghe D.S.(1988) has found that the Nominal Exchange Rate changes has
caused improvements in Sri Lankan Trade Balance in most of the years (study period
1971-1985). And the improvements were largely contributed by the depreciation of the
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Sri Lankan rupee. The Trade Balance effect of real exchange rate changes had not been so
impressive due to the high rates of inflation which prevailed in Sri Lanka in most of the
years. The effect of the unfavorable price changes on export earnings were moderated or
more than compensated for by the depreciation of the Sri Lankan rupee which induced
increased in the export volume. In the case of real exchange rate changes, the price of
imports recorded increases in most of the years. The movements of the index of nominal
effective exchange rate computed with the trade balance objective closely reflected the
effect of exchange rate changes on Sri Lanka’s trade balance. He has calculated Effective
Exchange Rates by using the variables, exports, imports etc.
Further, W.T.K.Perera (2009) has done this study to find the impact of real
depreciation of SLR on the trade balance in the short run and the long run (1970-2008),
employing bilateral trade data between Sri Lanka and its six major trading partners. There
was no specific pattern for the trade balance between Sri Lanka and its trading partners in
response to the change in real exchange rate, and none of the cases supported the J-curve
phenomenon. In the long run, only in the cases of India and Singapore has there been a
positive and significant impact on trade balance with the depreciation of the SLR. This
study emphasized that Sri Lanka has to take action to improve its income from exports
and reduce the expenditure on imports to overcome the problem in the trade deficit. The
study also revealed that both domestic and trading partners’ real incomes were important
determinants of Sri Lanka’s trade balance.
2.2. EMPIRICAL STUDIES IN OTHER COUNTRIES
Nusrate Aziz (2008) have done the Bangladesh study for 1972-2005 study period.
Mainly he has found that the Real Exchange rate has a positive effect on Balance of Trade
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in in Bangladesh in the long run. Both the Engle-Granger and the Johansen test confirmed
the presence of a long run co integrating relationship among the variables of interest in
the study. The study also suggested that the real exchange rate has a significant impact on
balance of trade of Bangladesh both in the short-run and long-run. The Granger causality
test proved the causal relation between exchange rate and balance of trade of Bangladesh.
The IRF also supported the above mentioned positive impact of real effective exchange
rate on balance of trade in the long run. The study clearly indicated that real depreciations
of exchange rate have been positively associated with improvement of balance of trade. In
the first step the long-run equilibrium relation among the variables has been estimated. In
the second step, they tested the order of integration of residuals using ADF statistic.
The study done by Ng Yuen-Ling (2008) attempted to identify the relationship
between the real exchange rate and trade balance in Malaysia from year 1955 to 2006.
This study used Unit Root Tests, Co integration techniques, Engle-Granger test, Vector
Error Correction Model (VECM), and impulse response analyses. The main findings of
this paper were: (i) long run relationship exists between trade balance and exchange rate.
Other important variables that determine trade balance such as domestic income showed a
long run positive relationship between trade balances, and foreign income shows a long
run negative relationship (ii) the real exchange rate was an important variable to the trade
balance, and devaluation will improve trade balance in the long run, thus consistent with
Marshall-Lerner condition (iii) the results indicate no J-curve effect in Malaysia case. In
this research, the results supported the empirical validity of the Marshall-Lerner condition
through VECM, indicating that depreciation has improved the trade balance.
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Pavle Petrovic (2009) has found that exchange rate depreciation in Serbia
improved trade balance in the long run (2001-2007), while giving rise to a J-curve effect
in the short run. Both Johansen’s and autoregressive distributed lag approach were
respectively used giving similar long-run estimates showing that real depreciation
improved trade balance. Corresponding error correction models as well as impulse
response functions indicated that, following currency depreciation, trade balance first
deteriorated before it later improves, exhibiting the J-curve pattern. The main findings of
the paper were that a real exchange rate depreciation has a significant positive long run
impact on the trade balance in Serbia, and that in the short run trade balance first
deteriorated before it later improves. The corresponding error correction models (ECM)
of trade balance captured its short run movements and indicated the existence of the J-
curve effect.
The Japanese study is done by Shao Zaiwei (2008) and identified the major
economic factors that influenced the bilateral trade balance between Japan and the US.
Differing from conventional elasticities approach, one more variable the net foreign assets
were added in the Vector Auto regression estimation using quarterly data from 1980: I to
2006: IV. The Johansen and Juselius result indicated three long-run relationships among
five macro variables: trade balance, domestic income, foreign income, net foreign assets
and real exchange rate. Short run adjustment parameters were identified as coefficients of
the error correction terms. The main finding of this paper was that taking the valuation
effect of the net foreign asset position into account, the final effect of the exchange rate
changes on trade balance was undetermined. Although appreciation could reduce trade
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surplus in the short run, in a longer horizon, there was no stable relationship. Besides
that, Granger causality procedure is carried out to investigate the causal relationship and
directions of causality between the variables. Finally, Impulse Response Analysis and
Variance Decomposition procedure are performed to provide more insight into short run
interaction between trade balance and those endogenous variables in the system.
Suleiman Monammad (2010) done this study and identified the depreciation of
domestic currency lead to unexpected falls in eport earnings in Pakistan. The study
examined validity of the Marshall Lerner condition in Pakistan data (1970-2008) by using
impulse response function which fulfills the J- curve idea. To evaluate long run
association among the variables by employing Johansson Co integration test. The end
consequence of test showed that there was a long run relationship among the variables at
vector two. The finding of this research paper showed that real depreciation of exchange
rate has positively impact on balance of trade. So the depreciation is in favor of Pakistan’s
export.
Tihomir Stucka (2004) done his research for 1994-2002 and used a reduced-form
model approach was used to estimate the trade balance response to permanent domestic
currency depreciation in Croatia. For this purpose, long-run and short-run effects were
estimated, using three modeling methods along with two real effective exchange rate
measures. Evidence of the J-curve was also found. This attempted to estimate the impact
of a permanent exchange rate depreciation on the merchandise trade balance employing a
reduced form model. The model was estimated using three methods - the ARDL "delta"
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approach developed by Pesaran, Shin, and Smith (1996). This study found evidence of the
J-curve effect in Croatia. The increase of the trade balance deficit as a consequence of the
J-curve effect is estimated to be between 2.0 percent and 3.3 percent. The empirical
results were consistent with the exception of one model. Overall, intuitively it seemed
unlikely that a permanent nominal depreciation of the domestic currency embodied in an
asymmetric intervention policy a pegged exchange rate regime would have a net
favorable effect on the entire economy, taking into account potential negative side effects.
Further Quio, H., (2005) did his study for East Asian Economies for the time
period of 1978-2004, to identify the post impact of a discrete exchange rate change and its
implications for net trade balance. He emphasized the difference between dollar debtor
and dollar creditor countries and concluded that even though currency devaluation may
improve the trade balance of a debtor country, appreciation may or may not reduce the
surplus of a creditor country. It was therefore inappropriate to follow the elasticity models
to use exchange rate to adjust trade balance predictably when the wealth effect,
investment effect and indirect investment effect (in East Asia) were all considered. His
model attested that such a move may not induce a reduction in the trade surplus.
Sekantsi. L.(2008), empirically examined the impact of real exchange rate
volatility on trade in the context of South Africa’s exports to the U.S. for the South
Africa’s floating period January 1995-February 2007. In measuring real exchange rate
volatility, this study utilized GARCH. After establishing the existence of cointegration
among the variables involved in our two-country export model, he estimated long-run
coefficients by means of ARDL bounds testing procedure proposed by Pesaran, et al.
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(2001). His results indicated that real exchange rate volatility exerts a significant and
negative impact on South Africa’s exports to the U.S. Therefore, stable and competitive
exchange rate and sound macroeconomic fundamentals were required in order to improve
international competitiveness and greater penetration of South African exports to
international markets.
Monacelli,T., & Perotti,R.,(2006) employed structural VAR techniques to
estimate, for a series of OECD countries. They have found that in all countries a rise in
government spending induces a real exchange rate depreciation and a trade balance
deficit. In the US, however, the effect on the trade balance is small. They have shown
how recent empirical evidence that points to a decline in the trade deficit after a budget
deficit shock can be traced to an alternative method to recover the fiscal shocks. Second,
in all countries private consumption rose in response to a government spending shock,
and therefore co-moves positively with the real exchange rate.
2.3. RESEARCH GAP
De Silva D.G. and Zen Zhu (1998), has not speculated the causal relationship between
the exchange rate and the trade balance. And his study stands for 1977-1997. No studies
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were conducted to fill this time gap (1997-2010). Wijesinghe D.S.(1988) analyzed his
findings by calcualating the Effective Exchange Rates, but has not used any of the
econometric tools for the analysis. And his study flows for the period 1971-1985. Silva
has filled his time gap by 12 years (1985-1997). But no studies have been done to fill the
remaining 13 years. W.T.K.Perera (2009) has found the impact of real depreciation of
SLR on the trade balance in the short run and the long run by using its 6 major trading
partners. And he has employed mainly the J curve phenomenon. In this study it is
proposed to add 4 more major trading partners (Singapore, Iran, China and Saudi Arabia)
and more econometric tools are proposed to use.
The geographical gap can be taken from the empirical studies in the other
countries, and also throughout the literature there is no study has done for the causal
impact of exchange rate on trade balance except the Malaysian case. Other than that the
trade balance behavior due to the external shocks is not investigated for the Sri Lankan
case.
Considering these gaps, it is proposed to fill them by employing the Granger
Causality test and the Impulse Response Function. And the other econometric tools will
be applied for the performance of the study. As a result of these applications, the time gap
will be instinctively filled.
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3. PROPOSED RESEARCH
3.1. RESEARCH PROBLEM
Based on the research gap which is identified by the literature, it is proposed to
investigate whether the exchange rate has a significant impact on trade balance in Sri
Lanka. Then the fundamental research problem will be;
Do the Exchange Rate changes affect the trade balance effectively?
Two macroeconomic variables are used in this research, namely Exchange Rate and
Balance of Trade. And the literature proves that there is a significant impact of exchange
rate on trade balance in Sri Lanka.
The exchange rate policy after 1977 has improved the trade balance, but has failed to
stimulate real output at least in the short run (Silva D. & Zhen Z. 1998).Depreciation has
been instrumental in making a favorable impact on the trade balance during the study
period except for the years 1971, 1979,1985 (Wijesinghe D.S. 1988).
Therefore, it is investigated that the exchange rate affects the balance of trade in Sri
Lanka. But there were no studies done to fill the time gap after 1997. Furthermore the
causal impact is not found. Then this study is done to fill these gaps by mainly using the
Granger Causality Test, Impulse Response Function and the other econometric tools.
In addition to the above fundamental research problem, it is proposed to identify the
existence of Marshal-Learner Condition by elasticity approach. Other than that the
existence of J curve phenomenon has to be identified.
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3.2. HYPOTHESIS
Impact of exchange rate changes on trade balance.
H0: Exchange Rate Changes do not affect the Trade balance.
H1: Exchange Rate depreciation improves the trade balance.
Existence of Marshal Learner Condition in Sri Lanka.
H0: Depreciation will not improve the trade balance even though the condition is
hold.
H1: Depreciation will improve the current account if the sum of the price elasticity
of domestic and foreign demands for imports is larger than unity.
3.3. OBJECTIVES
Main Objective
To investigate the impact of exchange rate changes on trade balance in Sri
Lanka.
Specific Objectives
To analyze the time series properties of the variables used in this study.
To understand the behavior of the variables in Sri Lanka.
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To analyze the short run and long run effect of exchange rate changes on the
trade.
To investigate the existence of Marshal Learner condition in Sri Lanka.
To identify the J curve phenomenon in Sri Lanka.
To suggest the policy implications.
3.4. IMPORTANCE OF THE STUDY.
The LKR is continuously depreciated all over the study period except some years. It is
expected that this would improve the trade balance, reduce inflation, and increase the rate
of output. The importance of this study lies in the evaluation of currency devaluation as a
long-term developmental policy in Sri Lanka that can serve as a model for other country
studies. The Central Bank uses devaluation as a policy tool for economic growth.
Therefore if there is such a relationship found, it can be mainly beneficial for two parties.
Those are;
i. Policy Makers
The Trade Balance is the dependent variable. It is a component of the Balance of
Payments. Therefore Balance of Payments can significantly influence the country’s GDP.
The GDP will determine the health of an economy. Then if a relationship found between
the trade balance and exchange rate, it can be manage in policy making.
ii. Exporters
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When the exchange rate is devaluated, the domestic currency will be weaker against the
foreign currency. And the local exporters are benefited. And If there is such a relationship
is investigated, it can be positively applied to the predictions of these exporters.
4. METHODOLOGY
This fragment concise the main variables, the frequency of data, the source of data study
period, and the econometric methods.
4.1. MAIN VARIABLES
Several variables are used in the calculations. Namely, exports, imports, trade share,
consumer price index, GDP, GDP deflator, Nominal Exchange Rate, Real Exchange Rate,
Nominal Effective Exchange Rate and Real Effective Exchange Rate.
I. Exports and Imports
These are the basic variables in this study. All the calculations are based on exports and
imports. Exports are used to calculate the Export Share and the Export Share is used in
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calculating Effective Exchange Rates. Imports are used to calculate the Import share and
it is used to calculate the Effective Exchange Rates.
II. Trade share
X= Exports
M= Imports
i = Major trading partners
Using this equation the major 10 trading partners are found. Those are;
USA, India, Japan, UK, Singapore, Germany, Hong Kong, Iran, China and Saudi Arabia.
III. Consumer Price Index(CPI)
Consumer Price Index is used to convert the nominal terms into the real terms. In this
research two basic real terms are calculated. Those are the Real Exchange Rate and the
Real Effective Exchange Rate. To do these calculations the Consumer Price Index will be
used.
IV. Nominal Exchange Rate
The nominal exchange rate is used to calculate the other RER, NEER & REER. It
includes the inflationary impact.
V. Real Exchange Rate
Trade Share =(X+M ) i
total (X+M )d
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The RER between two currencies is the product of the nominal exchange rate. It is
calculated by using the Nominal Exchange Rate.
VI. Nominal Effective Exchange Rate (NEER)
The Nominal Effective Exchange Rate measures the average change of a country’s
exchange rate against all other currencies.
R= Exchange Rate ( major trading partners)
W= Trade Share
VII. Real Effective Exchange Rate (REER).
The Real Effective Exchange Rate adjusts NEER by appropriate foreign price level and
deflates by the Sri Lankan price level.
Pdi= Domestic CPI
Pfi= Foreign CPI
R = Exchange Rate
NEER=∏j=1
m
r1j
W j
REER=∏j=1
m
(r PdiPfij
)wi
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4.2. FREQUENCY AND SOURCE OF DATA
Data come from the Central Bank (CBSL) Annual Reports, IMF Publications and
Econstat data of the World Bank. All the data are in US Dollar Billions. The
study employed 33 annual observations (1977-2010) of Sri Lanka and
the annual data is used because quarterly data of some relevant
variables are not available.
4.3. STUDY PERIOD
The study period is 1977-2010, Because the Exchange rate and the trade balance become
substantial with the trade liberalization in 1977.
4.4. THE MODEL
This study attempts to develop a similar model applied by Aziz N.
(2008) for Bangladesh, that the trade balance is a function of real
exchange rate and the domestic and foreign real income. A log-linear
specification of the model can be stated as follows:
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lnTB = β0 + β1 lnREER + β2 lnY+ β3 lnY*+ ui
Where, lnTB, lnX, lnM imply logarithm of balance of trade (lnX-lnM),
exports and imports at time respectively. lnREER, InY, In Y* are
logarithm of real effective exchange rate, Real GDP and world real
industrial production index (proxy of trade partners income).
4.5. ECONOMETRIC TOOLS
I. Granger Causality Method
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The Granger causality test is a statistical hypothesis test for determining whether one time
series is useful in forecasting another. There is an interpretation of a set of tests as
revealing something about causality. To identify the causal impact of exchange rate on
Balance of Trade, the Granger Causality Test can be applied.
II. Impulse Response Functions (IRF)
This can be used to measure the trade balance behavior due to the external shocks. This
represents the reactions of the variables to shocks hitting the system. And this test is
tested to identify the trade balance behavior due to the external shocks. An impulse
response refers to the reaction of any dynamic system in response to some external
change (Lin, 2006). It is an essential tool in this empirical causal analysis.
III. Graphical methods and summary statistics
The variables can be described by the graphical methods and summary statistics. There
are various variables are used in this research. And all the data is having the time series
property. There is a pattern of observed time series data. When the pattern is identified,
the interpretation can be done. The graphical methods and Summary statistics can be used
to show this relationship in a visible and understandable manner. So it can be used in
analyzing the results of this research.
IV. Vector Auto Regression
This can be used to check the linear interdependencies among multiple time series and
can be used in structural models with simultaneous equations.
V. Unit Root Test
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To identify the order of time series properties of this study unit root test is proposed to
employ. To test the stationary of the time series this is basically used. If one or both of the
series are non-stationary, the standard OLS approach will produce a spurious regression,
thus rendering standard testing techniques invalid (Fuei, 2007).
VI. Johansen’s Cointegration Method
This is a non stationary method. This study employs Johansen’s Cointegration method to
investigate both long-run and short-run relationship between the Exchange rate and the
trade balance.
VII. Autoregressive Distributed Lag Model (ARDL Model)
This study also employs ARDL model to investigate the long-run relationship Exchange
Rate and Trade Balance. This method does not require both variables to be non-stationary
at the same level or integrated in the same order.
VIII. Error Correction Model
An error correction model is a dynamical system with the characteristics that the
deviation of the current state from its long-run relationship will be fed into its short-run
dynamics. A rough long-run relationship can be determined by the cointegration vector,
and then this relationship can be utilized to develop a refined dynamic model.
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REFERENCES
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trade: Does the Marshall-Lerner condition hold? Journal of International
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the Trade Balance: SEACEN Research and Trainig Unit, Kuala Laumpur.
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Bangladesh, C22,F31.
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Standards: Stanford Center for International Development, Working Paper 05.
VIII. Shao,Z.,(2008), Exchange Rate Changes and Trade Balance; An Empirical Study
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University.
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International Journal of Business and Management, Vol.3.,No8.
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X. Pavle, P.,(2009),Exchange Rate and Trade Balance: Panoeconomics,
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XI. Mohammad, S.D., The Role of Exchange Rate Changes on Trade Balance:
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XII. Sekansti, L.,(2008), The Impact of Real Exchange Rate Volatility on South African
Exports to the United States: National University of Lesotho, JEL Classification:
F10, F31.
XIII. Monacelli,T., & Perotti,R.,(2006),Fiscal Policy, the Trade Balance, and the Real
Exchange Rate: Implications for International Risk Sharing.
XIV. WWW. Wikipedia .com.
APPENDICES
Some of the data which have been collected by this time are attached in this section.