The ''J-curve'' effect in bilateral trade: The impact of currency depreciation on trade balances between Albania and its main trading partners

This study evaluates the effects of exchange rate on bilateral trade flows between Albania and its main trading partners namely: Euro area, China, Greece, Germany, Italy, Kosovo and Turkey. The material seeks empirical evidences on the existence of the “J – curve” phenomenon in bilateral trade for the 1998 – 2012 period. The “error – correction model” approach seems to be the appropriate econometrical model in identifying the short and long-run effects of the real depreciation of the domestic currency (Albanian Lek) on bilateral trade balances between Albania and its main trading partners.