engleski

The impact of exchange rate changes on the trade balance in Croatia: Analysis of J-curve effect

The aim of this study is to test the short run and the long run exchange rate effects on the Croatian trade balance in the multivariate framework. It is shown that variables trade balance and real domestic and foreign incomes establish the long run steady state. The analysis of impulse response functions shows that the depreciation effects of real and nominal exchange rates to trade balance are alike. The results suggest that changes of nominal or real exchange rate cause the effect of J-curve only partly since in the long run the trade balance converges to the negative value.

Trade balance ; real exchange rate ; J-curve ; generalized impulse response function

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