Senadheera Pathirannehelage, Yashodha
This study investigates the possibility of improving the trade balance of Sri Lanka through currency depreciation. An error correction model (ECM) was used to examine the short-term and long-term effects of nominal and real effective exchange rate depreciation on the trade balance. While there is no long-run relationship between the real effective exchange rate and the trade balance, depreciation of the nominal effective exchange rate will lead to a deterioration of the trade balance in the...[Show more]
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