Earlier studies that investigated the relation between exchange rate and domestic output employed panel data. In this paper we improve upon the traditional approaches of the existing econometric literature on contractionary devaluation or depreciation by applying panel unit root and panel...

Exchange rate uncertainty is said to have negative or positive effects on the trade flows. A Large body of the empirical research that tries to address the issue has used aggregate trade data between one country and rest of the world, or bilateral total trade data between two countries. The...

The J-Curve effect is a concept used to describe the short-run effects of currency depreciation on the trade balance, i.e., an initial deterioration of the trade balance followed by an improvement. A concept close to the J-Curve is the S-Curve introduced by Backus, et al (1994) who found that...

Earlier studies that investigated the impact of devaluation on domestic production relied upon the aggregate demand analysis. They argued that by making a country?s exports cheaper and imports expensive, devaluation is said to stimulate the aggregate demand and thus, domestic production. In this...