Investigating in the J-curve phenomenon in Tunisia- ARDL bound test approach

Keywords: ARDL model, Exchange Rate, Income, J-curve, Trade Balance.


This paper investigates the relationship between trade balance, real exchange rates, and incomes in Tunisia by adopting the autoregressive distributed model (ARDL) by using data over the period of 1980 to 2018. We also used the bound test cointegration between variables at a 10% significant level. Our findings show that the Tunisia economy does not match the Marshall-Lerner condition in the long run, that provides an accurate description of the particular situation for which a country currency devaluation or depreciation its currency under both fixed or floating regime is predicted to enhance the trade balance of a country, which means there is no j-curve phenomenon in the long run, which tries to differentiate between the change of short-run and long-run effects in the change of exchange rate on the trade balance. Our findings match the Marshall-Lerner condition in the short run and can confirm the existing j-curve in the case of Tunisia.


Download data is not yet available.


Achy, L. (2011). Tunisia’s Economic challenges (Vol. 2011). Carnegie Endowment for International Peace Washington, DC.

Aghevli, B. B., Khan, M. S. & Montiel, P. (1991). Exchange rate policy in developing countries: some analytical issues (Vol. 78). International monetary fund.

Arize, A. C., Malindretos, J. & Igwe, E. U. (2017). Do exchange rate changes improve the trade balance: An asymmetric nonlinear cointegration approach. International Review of Economics & Finance, 49, 313–326. DOI:

Bahmani?Oskooee, M. & Saha, S. (2017). Asymmetric response of the US–India trade balance to exchange rate changes: Evidence from 68 industries. The World Economy, 40(10), 2226–2254. DOI:

Bahmani, M., Harvey, H. & Hegerty, S. W. (2013). Empirical tests of the Marshall-Lerner condition: a literature review. Journal of Economic Studies, 40(3), 411–443. DOI:

Beik, I. S. & Wardhana, W. (2011). The relationship between Jakarta Islamic Index and other selected markets: evidence from impulse response function. Jurnal Ekonomi Dan Bisnis Airlangga (JEBA)| Journal of Economics and Business Airlangga, 21(2).

Bentzen, J. & Engsted, T. (2001). A revival of the autoregressive distributed lag model in estimating energy demand relationships. Energy, 26(1), 45–55. DOI:

Braham, G. (2018). The Tunisian Revolution: Another case of state failure?

Brooks, C. (2019). Introductory econometrics for finance. Cambridge university press. DOI:

Brown, R. L., Durbin, J. & Evans, J. M. (1975). Techniques for testing the constancy of regression relationships over time. Journal of the Royal Statistical Society: Series B (Methodological), 37(2), 149–163.

Cooper, R. N. (1992). Currency devaluation in developing countries. In International Economic Policies and their Theoretical Foundations, 742–770. DOI:

Crane, L., Crowley, M. & Quayyum, S. (2007). Understanding the evolution of trade deficits: Trade elasticities of industrialized countries. Economic Perspectives, 31(4).

Duasa, J. (2007). Determinants of Malaysian trade balance: An ARDL bound testing approach. Global Economic Review, 36(1), 89–102. DOI:

Edwards, S. (1989). Real exchange rates, devaluation, and adjustment: exchange rate policy in developing countries. MIT press Cambridge, MA.

Eke, I. C., Eke, F. A. & Obafemi, N. O. (2015). Exchange rate behaviour and trade balances in Nigeria: an empirical investigation. International Journal of Humanities and Social Science, 5(8), 1.

Fariditavana, H. (2016). Exchange rate changes and the trade balance: Is the link symmetric or asymmetric? The University of Wisconsin-Milwaukee.

Ghose, A., Jamal, V. & Radwan, S. (2005). Tunisia: rural labour and structural transformation. Routledge. DOI:

Hunegnaw, F. B. & Kim, S. (2017). Foreign exchange rate and trade balance dynamics in East African countries. The Journal of International Trade & Economic Development, 26(8), 979–999. DOI:

Jedidia, K. Ben, Boujelbène, T. & Helali, K. (2014). Financial development and economic growth: New evidence from Tunisia. Journal of Policy Modeling, 36(5), 883–898. DOI:

Keho, Y. (2015). Foreign Direct Investment, Exports and Economic Growth: Some African Evidence. Journal of Applied Economics & Business Research, 5(4).

Kyophilavong, P., Shahbaz, M. & Uddin, G. S. (2013). Does J-curve phenomenon exist in case of Laos? An ARDL approach. Economic Modelling, 35, 833–839. DOI:

Lütkepohl, H. (1991). Introduction to multiple time series analysis. Springer Science & Business Media. DOI:

Magee, S. P. (1973). Currency contracts, pass-through, and devaluation. Brookings Papers on Economic Activity, 1973(1), 303–325. DOI:

Nec?ulescu, C. & ?erb?nescu, L. (2013). THE INFLUENCE OF THE FOREIGN TRADE BALANCE ON THE RON/EURO EXCHANGE RATE IN ROMANIA. Young Economists Journal/Revista Tinerilor Economisti, 10(20).

Onakoya, A. B., Johnson, S. B. & Ajibola, O. J. (2019). Exchange rate and trade balance: The case for J-curve Effect in Nigeria. KIU Journal of Social Sciences, 4(4), 47–63.

Ongan, S., Ozdemir, D. & Isik, C. (2018). Testing the J-curve hypothesis for the USA: applications of the nonlinear and linear ARDL models. South-Eastern Europe Journal of Economics, 16(1).

Ouattara, B. (2004). Modelling the long run determinants of private investment in Senegal. Credit Research Paper.

Perron, P. (1988). Trends and random walks in macroeconomic time series: Further evidence from a new approach. Journal of Economic Dynamics and Control, 12(2–3), 297–332. DOI:

Pesaran, B. & Pesaran, M. H. (2010). Time series econometrics using Microfit 5.0: A user’s manual. Oxford University Press, Inc.

Pesaran, M. H., Shin, Y. & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289–326. DOI:

Sam, C. Y., McNown, R. & Goh, S. K. (2019). An augmented autoregressive distributed lag bounds test for cointegration. Economic Modelling, 80, 130–141. DOI:

SHARMA, A., RISHAD, A. & GUPTA, S. (2019). Measuring the Impact of Oil Prices and Exchange Rate Shocks on Inflation: Evidence from India. Eurasian Journal of Business and Economics, 12(24), 45–64. DOI:

Suwanhirunkul, S. & Masih, M. (2018). Exchange rate and trade balance linkage: sectoral evidence from Thailand based on nonlinear ARDL.

Thomas, R. L. (1997). Modern econometrics: an introduction. Addison-Wesley Longman.

Trinh, P. T. T. (2014). The impact of exchange rate fluctuation on trade balance in the short and long run: the case of Vietnam. Journal of Southeast Asian Economies (JSEAE), 31(3), 432–452. DOI:

Tursoy, T. (2019). The interaction between stock prices and interest rates in Turkey: empirical evidence from ARDL bounds test cointegration. Financial Innovation, 5(1), 7. DOI:

Yazgan, M. E. & Ozturk, S. S. (2019). Real Exchange Rates and the Balance of Trade: Does the J-curve Effect Really Hold? Open Economies Review, 30(2), 343–373. DOI:

How to Cite
Shubaita, E., Mar’i, M., & Seraj, M. (2020). Investigating in the J-curve phenomenon in Tunisia- ARDL bound test approach. Journal of Economics and Behavioral Studies, 12(5(J), 23-32.
Research Paper