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The Malaysian real trade balance and the real exchange rate

The cointegration technique is used to examine the long-run and short-run relationships between the real Malaysian trade balance with the real exchange rate, domestic and world incomes. The results suggest that a real ringgit exchange rate depreciation improves the trade balance in the long run. Wor...

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Main Author: Yusoff, Mohammed
Format: Article
Language:English
Published: Taylor & Francis 2007
Subjects:
HF Commerce
HF1014 Balance of trade
Online Access:http://irep.iium.edu.my/4309/1/The_Malaysian_Real_Trade_Balance_and_the_Real___MBY.pdf
http://irep.iium.edu.my/4309/
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spelling my.iium.irep.43092012-03-05T03:23:39Z http://irep.iium.edu.my/4309/ The Malaysian real trade balance and the real exchange rate Yusoff, Mohammed HF Commerce HF1014 Balance of trade The cointegration technique is used to examine the long-run and short-run relationships between the real Malaysian trade balance with the real exchange rate, domestic and world incomes. The results suggest that a real ringgit exchange rate depreciation improves the trade balance in the long run. World and domestic incomes are also found to be important determinants of trade balance. The significance of world income on trade balance indicates that Malaysia is prone to external shocks. An error-correction model is then estimated to study the short-run dynamics of the effects of exchange rate. The impulse response analysis shows that the effect of exchange rate on the trade balance lasts for about three years. A devaluation of ringgit will initially improve the trade balance, albeit small,after which the trade balance starts to deteriorate, and then improves again suggesting that there exists a delayed J-curve. Taylor & Francis 2007 Article REM application/pdf en http://irep.iium.edu.my/4309/1/The_Malaysian_Real_Trade_Balance_and_the_Real___MBY.pdf Yusoff, Mohammed (2007) The Malaysian real trade balance and the real exchange rate. International Review of Applied Economics, 21 (5). pp. 655-667. ISSN 0269-2171 (P), 1465-3486 (O) http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=9c0824a0-a6a8-4eee-a3cb-a02214bb5e4a%40sessionmgr113&vid=4&hid=108 10.1080/02692170701474686
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HF Commerce
HF1014 Balance of trade
spellingShingle HF Commerce
HF1014 Balance of trade
Yusoff, Mohammed
The Malaysian real trade balance and the real exchange rate
description The cointegration technique is used to examine the long-run and short-run relationships between the real Malaysian trade balance with the real exchange rate, domestic and world incomes. The results suggest that a real ringgit exchange rate depreciation improves the trade balance in the long run. World and domestic incomes are also found to be important determinants of trade balance. The significance of world income on trade balance indicates that Malaysia is prone to external shocks. An error-correction model is then estimated to study the short-run dynamics of the effects of exchange rate. The impulse response analysis shows that the effect of exchange rate on the trade balance lasts for about three years. A devaluation of ringgit will initially improve the trade balance, albeit small,after which the trade balance starts to deteriorate, and then improves again suggesting that there exists a delayed J-curve.
format Article
author Yusoff, Mohammed
author_facet Yusoff, Mohammed
author_sort Yusoff, Mohammed
title The Malaysian real trade balance and the real exchange rate
title_short The Malaysian real trade balance and the real exchange rate
title_full The Malaysian real trade balance and the real exchange rate
title_fullStr The Malaysian real trade balance and the real exchange rate
title_full_unstemmed The Malaysian real trade balance and the real exchange rate
title_sort malaysian real trade balance and the real exchange rate
publisher Taylor & Francis
publishDate 2007
url http://irep.iium.edu.my/4309/1/The_Malaysian_Real_Trade_Balance_and_the_Real___MBY.pdf
http://irep.iium.edu.my/4309/
http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=9c0824a0-a6a8-4eee-a3cb-a02214bb5e4a%40sessionmgr113&vid=4&hid=108
_version_ 1643605315670769664
score 13.211869

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