This study shows the short and long-run impact of exchange rate on trade balance in Vietnam. Following a depreciation of real exchange rate, trade balance initially deteriorates. Trade balance will improve after four quarters and new equilibrium will be set after twelve quarters. Autoregressive distributed lag (ADRL) are used to explore long-run impact, showing trade […]

This research tries to find the degree of misalignment of VND by estimating short run and long run equilibrium effective real effective exchange rate (EREER) of VND. By using Engle-Granger (1987) two-step cointegration approach, we identify that trade openness, government expenditure, domestic credit and net foreign assets are important determinants of REER of VND. In […]