The Social Sciences
ISSN: Online 1993-6125ISSN: Print 1818-5800
Abstract
This study investigates the response of trade balance to exchange rate changes in Nigeria. The long-run relationship between these variables is explored using Engel-Granger Two-Stage, Johansen and the Autoregressive Distributed Lag cointegration approaches on a data sample between 1980:Q1 and 2007:Q4. The analyses show that there is only limited adjustment in the trade balance to exchange rate shocks in both the short- and long-run. Apparently, trade balance adjustment to exchange rate depreciation in Nigeria is prolonged. Although rightly signed (negative), it appears that that the elasticities of demand for export and import have not sufficiently adjusted to lead to improvement of trade balance thereby failing to depict a J-curve.
How to cite this article:
Oluwatosin A. Adeniyi, Olusegun A. Omisakin and Abimbola M. Oyinlola. Do Trade Balances Adjust to Exchange Rate Shocks? An Enquiry Evidence of J-Curve in Nigeria.
DOI: https://doi.org/10.36478/sscience.2013.72.79
URL: https://www.makhillpublications.co/view-article/1818-5800/sscience.2013.72.79