The Effect of Exchange Rate Movements on Trade Balance: A Chronological Theoretical Review | Zendy

Dhakir Abbas Ali | Zendy; Fuadah Johari | Zendy; Mohammad Haji Alias | Zendy

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The Effect of Exchange Rate Movements on Trade Balance: A Chronological Theoretical Review

Author(s) -

Dhakir Abbas Ali,

Fuadah Johari,

Mohammad Haji Alias

Publication year - 2014

Publication title -

economics research international

Language(s) - English

Resource type - Journals

eISSN - 2090-2123

pISSN - 2090-2131

DOI - 10.1155/2014/893170

Subject(s) - exchange rate , economics , balance of trade , balance (ability) , elasticity (physics) , econometrics , macroeconomics , keynesian economics , international economics , psychology , neuroscience , materials science , composite material

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

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