The J-Curve: Evidence from Fiji

Narayan, S and Narayan, P 2004, 'The J-Curve: Evidence from Fiji', International Review of Applied Economics, vol. 18, pp. 369-380.

Document type: Journal Article
Collection: Journal Articles

Title The J-Curve: Evidence from Fiji
Author(s) Narayan, S
Narayan, P
Year 2004
Journal name International Review of Applied Economics
Volume number 18
Start page 369
End page 380
Total pages 12
Publisher Routledge
Abstract This article provides new evidence on both long run and short-run determinants of trade balance for Fiji and investigates evidence of J-curve adjustment behaviour in the aftermath of a devaluation. We adopt a partial reduced form model that models the real trade balance directly as a function of the real exchange rate and real domestic and foreign incomes. Cointegration analysis is based on a recently developed autoregressive distributed lag approach-shown to provide robust results in finite samples. The long run elasticities are also estimated using a dynamic ordinary least squares approach and the Fully Modified Ordinary Least Squares (FM-OLS) approach. Amongst our key results we find that there is a long-run relationship between trade balance and its determinants. There is evidence of the J-curve pattern; growth in domestic income affects Fiji's trade balance adversely while foreign income improves it.
Subject Economic Development and Growth
DOI - identifier 10.1080/0269217042000227088
ISSN 0269-2171
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