Real Exchange Rate and Trade Balance Dynamics in Cote d'Ivoire

Authors

  • Yaya Keho Ecole Nationale Supérieure de Statistique et d'Economie Appliquée (ENSEA) Abidjan, Côte d'Ivoire.

Abstract

This study examines the relationship between real exchange rate and trade balance in Cote d'Ivoire during the period from 1975 to 2017. The study employs the ARDL bounds testing approach to cointegration developed by Pesaran et al. (2001) in the examination of this nexus. Cointegration analysis and error correction modeling are used to determine the long run as well as short run dynamics, between real exchange rate and trade balance. The empirical results show negative and significant effects of domestic income on trade balance both in the short and long run. Further, a depreciation of real exchange rate causes an improvement in the trade balance in a significant way both in the short and long run. This suggests that exchange rate variations are effective for increasing balance of trade for Cote d'Ivoire.

Keywords: trade balance, real exchange rate, bounds test, Cote d'Ivoire

JEL Classifications: C22, F10, F31

DOI: https://doi.org/10.32479/ijefi.10857

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Published

2021-01-18

How to Cite

Keho, Y. (2021). Real Exchange Rate and Trade Balance Dynamics in Cote d’Ivoire. International Journal of Economics and Financial Issues, 11(1), 61–70. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/10857

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