Effects of increased exchange rate on the Egyptian trade balance using the hypothesis of J- curve during the Period (1980- 2020)

The relationship between exchange rate and trade balance is a subject of extensive research in international economics, especially since 1973 when Magee (1973) introduced the concept of the effect of the (J-curve) curve. According to this concept, the real devaluation of the local currency leads to an initial deterioration in the trade balance in the short term, followed by an improvement in the long term, and that exchange rate fluctuations have repercussions on the Egyptian economy and the trade balance, and some believe that the decline in the real exchange rate has a significant impact on Improving the trade balance, while others reported that the rise in the exchange rate results in an improvement in the trade balance. On the other hand, others see that this relationship is not significant, and thus the current research aims to determine the effects of the high exchange rate (devaluation of the currency) on the balance of trade balance in Egypt, where the applied studies are contradictory in their results within the framework of this problem. The researcher relied on a dynamic holistic model applied to the Egyptian economy for the period 1980 - 2020, and it was estimated using the ARDL model to test the short and long-term relationships between the variables. The real improvement in the trade balance in the short and long term, and we find that J-Curve applies to the Egyptian economy during the study period in the long term only and does not apply in the short term.