Munich Personal RePEc Archive

Impact of Devaluation on Industrial Exports in Saudi Arabia: J-Curve Hypothesis

Mahmood, Haider and Alkhateeb, Tarek Tawfik Yousef and Ahmed, Nawaz (2017): Impact of Devaluation on Industrial Exports in Saudi Arabia: J-Curve Hypothesis. Published in: Actual Problems of Economics , Vol. 18, No. 3 (15 July 2017): pp. 331-341.


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Most of studies in past literature on J-curve has been dealt with aggregated data of trade and very few deals with phenomena of non-linear ARDL. This study does an analysis of J-curve by using annual data of 1970-2015 for industrial dis-aggregated exports of Saudi Arabia, to remove aggregation biasness, by using non-linear ARDL technique introduced by Shin et al. (2014). The strong evidence of cointegration of real exchange rate and industrial exports has been found for all of our models. World income has been reflected the positive contribution in industrial exports. An appreciation of Saudi Riyal has been found responsible for depressing the industrial exports except of food stuff and metal and articles in the long run. A devaluation has been helpful in raising industrial exports except the food stuff, plastic products and other exports’ group category. Asymmetrical effects of devaluation and appreciation have been found in industrial exports. J-curve hypothesis has been validated for only electrical products. This study recommends for devaluation of Saudi Riyal to promote industrial exports.

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