<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The paper investigates the effect of the real effective exchange rate depreciation of the lek on the trade balance of Albania using quarterly data from 1994 to 2015. Bounds testing cointegration approach, vector error correction model (VECM), and impulse response were used for the empirical analysis. The results of the study show a long-term cointegration between the real effective exchange rate (REER) and the trade balance (TB). Specifically, the REER depreciation positively affects the trade balance of Albania in both the long and short run, indicating the weak presence of the J-curve effect. Important recommendations were derived from the results.</p></abstract>

The paper investigates the effect of the real effective exchange rate depreciation of the lek on the trade balance of Albania using quarterly data from 1994 to 2015. Bounds testing cointegration approach, vector error correction model (VECM), and impulse response were used for the empirical analysis. The results of the study show a long-term cointegration between the real effective exchange rate (REER) and the trade balance (TB). Specifically, the REER depreciation positively affects the trade balance of Albania in both the long and short run, indicating the weak presence of the J-curve effect. Important recommendations were derived from the results.

Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania

Faculty of Management and Business Economics

Naše gospodarstvo/Our economy

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania"}

The paper investigates the effect of the real effective exchange rate depreciation of the lek on the trade balance of Albania using quarterly data from 1994 to...

Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania

Published Online: Sep 23, 2017

Page range: 27 - 36

Received: Feb 01, 2017

Accepted: Jul 01, 2017

DOI: https://doi.org/10.1515/ngoe-2017-0016

Keywords
J-curve, cointegration, elasticity, short-term effect, long-term effect

© 2017 Safet Kurtović et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania

Published Online: Sep 23, 2017

Page range: 27 - 36

Received: Feb 01, 2017

Accepted: Jul 01, 2017

DOI: https://doi.org/10.1515/ngoe-2017-0016

KeywordsJ-curve, cointegration, elasticity, short-term effect, long-term effect

© 2017 Safet Kurtović et al., published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
J-curve, cointegration, elasticity, short-term effect, long-term effect