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The Effect of Exchange Rate Movements on Trade Balance: A Chronological Theoretical Review
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Journal Article
The Effect of Exchange Rate Movements on Trade Balance: A Chronological Theoretical Review
2014
Overview
This paper evaluates the current state of the literature concerning the effects of exchange rate movements on trade balance. Thus, this paper is a review article and provides a survey of the alternative theories that focus on the effect of exchange rate changes on the trade balance. It systemizes the literature into four distinct reviews and approaches following the chronological order. The paper presents the (a) Standard Theory of International Trade, (b) Elasticity Approach, (c) Keynesian Absorption Approach, and (d) Monetary Approach. The study shows that higher attention should be given for the most plausible dynamic theory in this field, known as the J-Curve.
Publisher
Hindawi Publishing Corporation,Hindawi Limited
