The Impact of the Change in the Exchange Rate of the US dollar on the Trade Balance: Algeria Case Study - Econometric Study (1990 - 2016)

Fatiha MOKHTARI; Abdelouahab CHENIKHAR

doi:10.54960/jfcg.v2i2.26

Authors

Fatiha MOKHTARI Bechar University, Algeria
Abdelouahab CHENIKHAR Oum El Bouaghi University, Algeria.

DOI:

https://doi.org/10.54960/jfcg.v2i2.26

Keywords:

Algerian Dinar exchange rates, trade balance, cointegration, Granger causality, immediate response functions

Abstract

This research study aims at assessing the impact of the Algerian Dinar exchange rates variations on the Algerian trade balance during the period from 1990 to 2016.To achieve such an aim, we adopted a measuring model that suits local economy reality. The chosen model assessment was carried out by means of the OLS method and the cointegration test to notice if there are long term relationship between the dependent variable and interpreting ones.

Econometrics analysis showed that exchange rate variations have negative impact on trade balance as an inverse relationship exists between exchange rate variations and trade balance, which is the exact opposite of what is stated by economic theory, the cointegration test showed no relations at all between dependent and interpreting variables in the long run.

We concluded that Granger causality test gave results which rule out any causal relationship between dependent and independent variables as immediate response functions test showed weak trade balance response to any shock due to exchange rate variations of the local currency during the studied period.

Downloads

Download data is not yet available.

References

Adeymi A. Ogundipe, Paul Ojeaga, Oluwatomsin M. Ogundipe. (sep 2013). « Estimating The Long run Effects of Exchange rate Devaluation on The Trade Balance of Nigeria » Euroean scientifique journal .vol.9, No.25.

Pham thi tuyet Trinh. (2012). « The impact of exchange rate fluctuation on trade balance in Short And long run”, Banking university of hochiminh city vietnam, Depocen working paper No. 23.

Bedi Guy Herve Dram. (2 April 2010). « The Effects of Real Exchange Rate on Trade Balance in Cote d’Ivoire: Evidence From The Cointegration Analysis and Error- Correction Models”, School of International Business and Management, Shanghai University, MPRA paper No. 21810, posted 7.

Ng yuen-Ling, Har Wai- Mun, Tan Geoi-Mei.(2008). « Real Exchange Rate and Trade balance Relationship : An Empirical Study On Malaysia"., International Journal Of business and Management, Vol.3, No.8.

Khaled Mohammed ElSawai, (2017). "Determinants of the Jordanian Trade Balance: The Model of Self-Regression of Distributed Time Leaps", Al-Zarqa Journal for Economic Research and Human Studies, Jordan, Vol 17.No 1.

Abdeldjalil Hadjira, (2011-2012). The Impact of Exchange Rate Changes on the Trade Balance - Case Study of Algeria - Master of International Finance, Tlemcen, Algeria, 97-98.

Bassam Hidjaz, (2003). International Economic Relations, University Institution for Studies Publishing and Distribution, Beirut, 64.

Régis bourbounais, (2012). « exrcices pédagogiques déconométric », 2e edition, économica, paris, 159.

Mohammed Sheikhi, (2012). "Methods of econometrics - lectures and applications", first edition, Dar Al-Hamed Publishing and Distribution, Amman, Jordan. 276-277.

Bourahli khaled,Bouroucha karim, Alaoui Mohammed lahcen. (2015). "The Effectiveness of Policy on Reducing Trade Balance in Developing Countries - Case Study of Algeria during the Period 1986-2014", Journal of Quantitative Economic Studies, Ouargla, Algeria, No 1. 185.