The J-Curve Hypothesis And Currency Devaluation: Cases Of Egypt And Ghana

Abstract

The paper reviews effects of devaluation on balance of trade by using Marshall Lerner condition, J-Curve hypothesis. It extends the hypothesis further to consider a case of continuous devaluations of exchange rates. After initially contributing to conventional theory of J-Curve hypothesis, and the paper then tests the theory for cases of Ghana and Egypt. In both cases it is found that theoretical arguments are consistent with empirical evidence. Paper consists of four sections including introduction.