J-CURVE AND MARSHALL-LERNER CONDITION: EVIDENCE FOR NET EXPORTS OF THE STATE OF CEARÁ

Abstract

This work investigates the occurrence of the J curve and the validity of the Marshall-Lerner condition for the trade balance of the state of Ceará, using monthly data between January 2000 and july 2013 and error correction vectors. In most of the models considered, the response of net exports in Ceará to a currency depreciation was positive and elastic, thus validating the Marshall-Lerner condition. This response was larger for industrial goods. Furthermore, the impact of the industrial activity in Ceará was positive and elastic to its trade balance, and foreign activity does not seem to influence it. Lastly, the examination of short term relationships revealed the occurrence of the J curve in most cases analyzed.