Is the J-Curve Effect observable for Egypt economy?

The primary purpose of this paper is to examine the effects of bilateral real exchange rate rer,relative gross domestic product gdp and relative income y on the bilateral trade balances tb for egypt vis-à-vis 20 of her major trading partners (algeria,brazil,canada,china,denmark,france,germany,greece,india,italy,japan,jordon,morocco,sudan,saudi,spain,turkey,syria,uk,usa) over 1989: 2010. results based on the ardl bounds procedure estimated by fgls,pooled mean group pmg estimator and dynamic fixed effects model dfe confirm that a stable,long-run relationship exists among tb and rer,gdp and y. the main finding of this paper is that real exchange rate variations explain a considerable part of the trade balance change in egypt. the results indicate that,in short run,depreciation deteriorated the trade balance tb,but depreciation improved the tb in the long run,and these results consistent with marshall-lerner condition and the j-curve effect in egypt case. the implications of the findings are (i) the exchange rate policy stays the almost possible tool for egyptian policy maker,(ii) after given time real depreciation can improve the trade balance and increase export competitiveness of egypt.