DOUGLASON GODWIN O.
Abstract
The paper empirically tests the existence of the J-curve hypothesis using Nigerian sectoral data. The hypothesis asserts
that adjustment to a disturbance in payments is not instantaneous since a certain period of time would have to elapse before
variation in the exchange-rate can restore equilibrium in the trade balance. In this study the J-curve hypothesis was tested
using data on the Nigerian agricultural sector. The analyzed model is a multiplier-based framework which imposes an Almon
lag structure on the exchange rate regimes The empirical results indicate that the J-curve does not exist in Nigerian
agricultural sector precisely in the long-run since the pattern of lag between the exchange rate depreciation and the
trade balance resembles more of an asymmetric S-shape of a horizontal S.
Key words:
J-curve, Nigeria, agriculture sector, S-curve, exchange rate