Articles
Exchange Rate, Competitiveness and Balance of Payment Performance
Authors:
- UP AlawattageEmail UP Alawattage
Abstract
This paper examines the effectiveness of exchange rate policy of Sri Lanka in achieving external competitiveness since liberalization of the economy in 1977. The conventional two-country trade model that explains the traditional approach to Balance of Payment (BOP) was applied using quarterly data covering the period of 1978:1 to 2000:4. Results reveal that the Real Effective Exchange Rate(REER) does not have significant impact on improving the Trade Balance (TB) particularly in the short run implying a blurred J-Curve phenomenon. Even though the cointegration tests reveal that there is a long run relationship between TB and the REER it shows very marginal impact in improving TB in long run. (JEL F40, O24)
DOI: 10.4038/ss.v35i1.1234
Staff Studies Volume 35 Numbers 1& 2 2005 p.63-91
Keywords:
- Page/Article: 63-91
- DOI: 10.4038/ss.v35i1.1234
- Published on 15 Oct 2009
- Peer Reviewed