The type of exchange rate regime a country should adopt and ideal level of the currency have has been an ongoing debate amongst academics, politician and trade unionists. The South African economic debate is currently dominated by debates on the appropriate level of the exchange rate of the rand. With the high volatility of the rand and the rapid appreciation of the rand in 2010 there have been calls for various sectors for government to intervene and devalue the rand. The premise is that devaluation will help counter the volatility of the rand and help stimulate South Africa’s export sector thereby resulting in an improvement of the trade balance. The aim of this research was to determine if there is a relationship between South Africa’s exchange rate and the trade balance and to determine if devaluation of the rand would have a positive influence on the trade balance. Furthermore the extent to which the trade balance would follow the J-Curve effect following devaluation was investigated. Using the long term trade balance model and Autoregressive Distributed Lagged (ARDL) model between the analyses was done between South Africa and the BRIC countries. The conclusion reached was that a devaluation of the rand would not necessarily lead to a long term improvement of the trade balance and no evidence of the J-Curve effect was found. Copyright / Dissertation (MBA)--University of Pretoria, 2011. / Gordon Institute of Business Science (GIBS) / unrestricted

In this paper, we examined the effects of real effective exchange rate (REER) changes on the Zambia´s trade balance, and whether the Marshal-Lerner condition (M-Lerner condition) and the Jcurve effect are satisfied in Zambia following the depreciation of the Zambian Kwacha (ZMK) against the U.S. dollar. Using annual time series data from 1990 through to 2019, the Johansen cointegration test results show that there is a long run relationship between the trade balance, the real effective exchange rate, the Zambia's GDP growth, the world´s GDP growth, and the Zambia´s terms of trade. A standard trade balance model was employed to estimate the long run and short run relationships between the trade balance and the variables in the trade balance model. The results from the trade balance show that the depreciation of the ZMK against the U.S. dollar improves the trade balance in the long run though the results could not validate the M-L condition since the coefficient value of REER was found to be far much less than unity (1). The results further uncover that the world´s GDP growth and the terms of trade both have a significant positive effect on the trade balance in the long run. The Zambia´s GDP growth was found to be statistically insignificant. In the short run, the results from the trade balance model show that the effects of the depreciation of the ZMK against the U.S. dollar on the trade balance were statistically insignificant, thus not consistent with the J-curve effect. The results from the Error Correction Model (ECM) on the other hand show that about 6.3% of the disequilibrium in the Zambia´s trade balance model is corrected every after one year.

This paper examines the effects of the exchange rate on bilateral industry trade in Sweden's trade with the Euro area. This is done by examining whether the J-curve effect exists using quarterly data from 1995 until 2022. Since becoming floating in the 1990s, the Swedish Krona has weakened significantly and recently, the discussion about the weakness of the Swedish Krona has gained renewed attention. Since Sweden is a small and open economy highly dependent on international trade, changes in the exchange rate may have large effects on the Swedish economy. The J-curve effect implies that the trade balance following a depreciation may initially worsen before later improving. The ARDL-approach is employed to obtain both short- and long-run effects of a depreciation on Swedish trade balance. In the 66 industries studied, little support can be found for a J-curve effect in Sweden's trade with the Euro area. Although 27 industries present short-run effects of a depreciation only five lasts until the long-run. Similarly, the results indicate that industries with a lower share of foreign inputs in their exports are affected more favourable than those with a higher share in the short run. No such results are found in the long run.

Thesis (M. Commerce (Economics)) -- University of Limpopo, 2016 / The purpose of this paper is to ascertain the impact of the real effective exchange rate on South Africa‟s trade balance and whether the J-curve phenomenon and the Marshal-Lerner condition are satisfied in the economy. Using data spanning the period 1980Q1 – 2014Q4, the Autoregressive Distributed Lag (ARDL) bounds test as well as the Johansen cointegration test were employed to test for the long run cointegrating relationship between the variables. The ARDL approach was employed to estimate both the long run and short run models as well as to ascertain whether the Marshal – Learner condition as well as the J-curve phenomenon are satisfied in the RSA economy. The results from the cointegration tests show that there is a stable long run equilibrium relationship between the trade balance, real effective exchange rate, domestic GDP, money supply, terms of trade and foreign reserves. The results from the Autoregressive Distributed Lag long run model show that a depreciation of the ZAR improves the trade balance, thus confirming the MarshalLerner condition. The results further reveal that domestic GDP and money supply both have a significant negative impact on the trade balance in the long run with the terms of trade reported positive as well. Foreign reserves were not found to significantly affect the trade balance in the long run. In the short run, the ARDL error correction model shows that a ZAR depreciation leads to a deterioration of the trade balance, thus confirming the J-curve effect for the RSA economy. The terms of trade effect was reported positive in the short run, thus confirming the Harberger-LaursenMetzler effect (HLME) in the process. Money supply, domestic GDP and foreign reserves are also found to have a significant negative impact on the trade balance in the short run. Finally, the error correction model reveals that about 26% of the disequilibrium in the trade balance model is corrected in each quarter.