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Title: |
Cointegration Test of a Long-Run Relation
between the Real Effective Exchange Rate and the Trade Balance |
| Author: |
Arize,
Augustine C. |
| Author
Affiliation: |
E TX State U |
| Source: |
International Economic Journal, Autumn 1994, v. 8, no. 3, pp. 1-9 |
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Publication Date: |
Autumn 1994 |
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Abstract: |
This paper uses newly developed
cointegration methodologies to examine the long-run relation between the
real effective exchange rate and the trade balance in nine Asian
economies over the present flexible exchange rate period, 1973q1 through
1991q1. The results indicate that there exists a positive and
significant long-run "statistical equilibrium" between the trade balance
and the real effective exchange rate in Asia. The approach adopted in
this study is found to be an acceptable substitute for testing the
Marshall-Lerner condition of stability. |
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