Currency devaluation and external adjustment in Romania
Currency devaluation and external adjustment in Romania

Summary/Abstract: The following work analyzes the impact of fluctuating exchange rates on Romanian trade balance, having as a theoretical background the Marshall-Lerner condition. The autoregressive distributed lag model was employed to estimate a bilateral trade model for Romania with its major commercial partners from Euro Area. The resulting data confirm that, between 1999 and 2016, the Marshall-Lerner condition is fulfilled and a real currency depreciation has an important positive impact on trade balance together with both national and foreign income.

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