The J-Curve Effect on the Trade Balance in Armenia

Gevorg Grigoryan

doi:doi:10.11648/j.ijefm.20150303.23

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The J-Curve Effect on the Trade Balance in Armenia

Gevorg Grigoryan

Published in International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 3)

Received: 27 April 2015 Accepted: 11 May 2015 Published: 23 May 2015

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Abstract

Over the past years the Armenian Dram has appreciated against their major trading partners’ currencies. Such appreciation has received mixed reactions. Some economists argue that the depreciation of currencies is a good stimulant for export growth, while others argue that the net benefits of depreciation cannot outweigh its ills on the economy. The purpose of this paper is to investigate the effects of depreciation on the trade balance of Armenia using vector error correction model (VECM) and to trace the response of the trade balance to the shocks in the exchange rate using Impulse response function. This study finds evidence of the J-curve on the Armenian trade balance and the existence of a long-run equilibrium relationship among the variables. This suggests that following a real depreciation the trade balance will initially deteriorate, but will improve in the long run.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 3)
DOI	10.11648/j.ijefm.20150303.23
Page(s)	270-278
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Armenia, J-Curve, Exchange Rate, Trade Balance, VECM

References

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[19]	Pesaran, M. H. Y. Shin and Smith, R. J. (2iJ01) Bounds testing approaches to the analysis of level relationships, journal of Applied Econometrics. 16, 289-326.
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APA Style

Gevorg Grigoryan. (2015). The J-Curve Effect on the Trade Balance in Armenia. International Journal of Economics, Finance and Management Sciences, 3(3), 270-278. https://doi.org/10.11648/j.ijefm.20150303.23

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ACS Style

Gevorg Grigoryan. The J-Curve Effect on the Trade Balance in Armenia. Int. J. Econ. Finance Manag. Sci. 2015, 3(3), 270-278. doi: 10.11648/j.ijefm.20150303.23

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AMA Style

Gevorg Grigoryan. The J-Curve Effect on the Trade Balance in Armenia. Int J Econ Finance Manag Sci. 2015;3(3):270-278. doi: 10.11648/j.ijefm.20150303.23

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@article{10.11648/j.ijefm.20150303.23,
  author = {Gevorg Grigoryan},
  title = {The J-Curve Effect on the Trade Balance in Armenia},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {3},
  pages = {270-278},
  doi = {10.11648/j.ijefm.20150303.23},
  url = {https://doi.org/10.11648/j.ijefm.20150303.23},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150303.23},
  abstract = {Over the past years the Armenian Dram has appreciated against their major trading partners’ currencies. Such appreciation has received mixed reactions. Some economists argue that the depreciation of currencies is a good stimulant for export growth, while others argue that the net benefits of depreciation cannot outweigh its ills on the economy. The purpose of this paper is to investigate the effects of depreciation on the trade balance of Armenia using vector error correction model (VECM) and to trace the response of the trade balance to the shocks in the exchange rate using Impulse response function. This study finds evidence of the J-curve on the Armenian trade balance and the existence of a long-run equilibrium relationship among the variables. This suggests that following a real depreciation the trade balance will initially deteriorate, but will improve in the long run.},
 year = {2015}
}

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TY  - JOUR
T1  - The J-Curve Effect on the Trade Balance in Armenia
AU  - Gevorg Grigoryan
Y1  - 2015/05/23
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150303.23
DO  - 10.11648/j.ijefm.20150303.23
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 270
EP  - 278
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150303.23
AB  - Over the past years the Armenian Dram has appreciated against their major trading partners’ currencies. Such appreciation has received mixed reactions. Some economists argue that the depreciation of currencies is a good stimulant for export growth, while others argue that the net benefits of depreciation cannot outweigh its ills on the economy. The purpose of this paper is to investigate the effects of depreciation on the trade balance of Armenia using vector error correction model (VECM) and to trace the response of the trade balance to the shocks in the exchange rate using Impulse response function. This study finds evidence of the J-curve on the Armenian trade balance and the existence of a long-run equilibrium relationship among the variables. This suggests that following a real depreciation the trade balance will initially deteriorate, but will improve in the long run.
VL  - 3
IS  - 3
ER  -

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Author Information

Gevorg Grigoryan

Shanghai University of Finance & Economics, School of Finance, Shanghai, China

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APA Style

Gevorg Grigoryan. (2015). The J-Curve Effect on the Trade Balance in Armenia. International Journal of Economics, Finance and Management Sciences, 3(3), 270-278. https://doi.org/10.11648/j.ijefm.20150303.23

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ACS Style

Gevorg Grigoryan. The J-Curve Effect on the Trade Balance in Armenia. Int. J. Econ. Finance Manag. Sci. 2015, 3(3), 270-278. doi: 10.11648/j.ijefm.20150303.23

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AMA Style

Gevorg Grigoryan. The J-Curve Effect on the Trade Balance in Armenia. Int J Econ Finance Manag Sci. 2015;3(3):270-278. doi: 10.11648/j.ijefm.20150303.23

Copy | Download

@article{10.11648/j.ijefm.20150303.23,
  author = {Gevorg Grigoryan},
  title = {The J-Curve Effect on the Trade Balance in Armenia},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {3},
  pages = {270-278},
  doi = {10.11648/j.ijefm.20150303.23},
  url = {https://doi.org/10.11648/j.ijefm.20150303.23},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150303.23},
  abstract = {Over the past years the Armenian Dram has appreciated against their major trading partners’ currencies. Such appreciation has received mixed reactions. Some economists argue that the depreciation of currencies is a good stimulant for export growth, while others argue that the net benefits of depreciation cannot outweigh its ills on the economy. The purpose of this paper is to investigate the effects of depreciation on the trade balance of Armenia using vector error correction model (VECM) and to trace the response of the trade balance to the shocks in the exchange rate using Impulse response function. This study finds evidence of the J-curve on the Armenian trade balance and the existence of a long-run equilibrium relationship among the variables. This suggests that following a real depreciation the trade balance will initially deteriorate, but will improve in the long run.},
 year = {2015}
}

Copy | Download

TY  - JOUR
T1  - The J-Curve Effect on the Trade Balance in Armenia
AU  - Gevorg Grigoryan
Y1  - 2015/05/23
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150303.23
DO  - 10.11648/j.ijefm.20150303.23
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 270
EP  - 278
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150303.23
AB  - Over the past years the Armenian Dram has appreciated against their major trading partners’ currencies. Such appreciation has received mixed reactions. Some economists argue that the depreciation of currencies is a good stimulant for export growth, while others argue that the net benefits of depreciation cannot outweigh its ills on the economy. The purpose of this paper is to investigate the effects of depreciation on the trade balance of Armenia using vector error correction model (VECM) and to trace the response of the trade balance to the shocks in the exchange rate using Impulse response function. This study finds evidence of the J-curve on the Armenian trade balance and the existence of a long-run equilibrium relationship among the variables. This suggests that following a real depreciation the trade balance will initially deteriorate, but will improve in the long run.
VL  - 3
IS  - 3
ER  -

Copy | Download