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Issue Q4 2017  
Does the J-curve hypothesis hold for a small open economy? Evidence from time-varying coefficients of a distributed-lag model for Tunisia  
Mohamed Mehdi Jelassi
Jamel Trabelsi
Maryem Turki
This paper determines how the Tunisian trade balance reacts to exchange rate changes during the post liberalization period, 1993:01 to 2014:03. To achieve this, a state space specification technique is employed to estimate a trade balance model for Tunisia. Our findings suggest that the real effective exchange rate has a significant impact on the trade balance of Tunisia, showing oscillating effects that can be best described by a “W-curve.” Abstract

Trade balance ; Effective real exchange rate ; J- curve ; Kalman Filter ; Keywords
F14 ; F31 ; F32 ; C32 ; JEL classification
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