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Real exchange rate and bilateral trade balance: Sweden vis-à-vis Belgium, the Netherlands and Spain
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Statistics.
2014 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

Using the Johansen cointegration test and the error-correction model, this thesis examines the relationship between real exchange rate and bilateral trade balance of Sweden with Belgium, the Netherlands and Spain over the 1998:1- 2014:1 period. The results suggest the presence of a long-run cointegrating relationship among trade balance, real exchange rate, foreign real income and domestic real income in each bilateral case. In the long run, real depreciation tends to worsen the Sweden-Belgium trade balance. The results further indicate the presence of an immediate impact and short-run causality from real exchange rate to trade balance in the Sweden-Belgium and Sweden-Netherlands cases, as well as the J-curve effects in the Sweden-Netherlands and Sweden-Spain cases. 

Place, publisher, year, edition, pages
Keyword [en]
Cointegration; error-correction model; J-curve; Marshall-Lerner condition
National Category
Social Sciences
URN: urn:nbn:se:uu:diva-226002OAI: oai:DiVA.org:uu-226002DiVA: diva2:723352
2014-06-05, F332, Ekonomikum, Uppsala, 10:45 (English)
Available from: 2014-06-13 Created: 2014-06-10 Last updated: 2014-06-13Bibliographically approved

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