Date of Award
Master of Arts
Dr. Susan Pozo
Dr. Raymond Zelder
Masters Thesis-Open Access
The effects of exchange-rate changes on the trade balance and the balance of payments of selected European countries is examined in this paper. Of particular interest are estimates of the existence and length of the J-curve effect, which describes the curve the trade balance may follow over time after devaluation. Contrary to popular expectations, the trade balance may deteriorate further after devaluation before "turning around" and improving.
Quarterly data from 1973 to 1985 for Belgium, Denmark, France, West Germany, Ireland, Italy and the Netherlands were used in this study. Out of a total of 84 realignments the J-curve was observed in 27 cases. The curves differed considerably in length, but the balance showed improvement after 3 quarters, a shorter period than has been reported in earlier studies.
Bomke, "The J-Curve: An Empirical Investigation of the Trade Balance and Balance of Payments in Seven European Countries" (1987). Master's Theses. 1309.