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ices in domestic currency and an inelastic export supply due to delayed change in production. Finally quantity adjustment period reflects where the M-L condition of elasticities to improve in longer period that trade balance improvements can be attained. Cited on Kimbugwe, H, November, 2007, Junz and Rhomberg (1973) presented five lags; namely: recognition lags, decision lags, delivery lags, replacement lags and production lags in relation to the delayed changing pattern of consumption and production that hinders trade balance improvement depicting “J curve” after devaluation.

Further Miles (1979) strengthened the conclusion for the deficiency positive effect of currency devaluation on trade balance through incorporating additional variables that are relevant to see the overall impact of devaluation. With this Miles (1979) considered variables such as government monetary and fiscal policies as well as growth rates into his analysis. Using aggregated data on 14 countries Miles found out currency devaluation by these countries did not bring the intended trade balance improvement rather brought balance of payment improvement through capital account. Accordingly, the balance of payment showed such result due to the surplus in capital account through portfolio readjustment caused by devaluation. In contrary, Himarious (1985) claimed the conversional agreement of M-L condition for devaluation to improve trade balance works. Himarious (1985) pointed out that nominal exchange rate utilized by Miles (1979) as a short fall of Miles analysis. Hence, correcting for this defect and modifying Miles (1979) analysis frame work to fit as absorption approach of devaluation on trade balance, nine countries under the study showed a trade balance improvement (cited on Bahmani-Oskooee and A. Ratha, 2004).

In 1994 Bahmani-Oskooee and Alse, noted that differenced variables Miles used for his analysis were stationary. In contrary level variables used by Himarios (1989) were non-stationary [6] . With this Bahmani-Oskooee and Alse (1994) were skeptical on the result of Himarios. Further Bahmani-Oskooee and Alse (1994) employed the Engle-Granger Cointegration technique [7] to analyze the impact of devaluation on trade balance based on real effective exchange rate and trade balance quarterly data for 19 developed and 22 less developed countries. Their result confirmed the positive long-run impact of exchange rate as in the M-L condition for three developing countries; negative for Ireland and no effect at all for the majority of developed courtiers.

The sector wise J curve approach towards devaluation was first analyzed by Meade (1988) for US economy. The non-oil industrial supplies faced short lived trade balance deterioration and realized fast improvements after wards. While capital goods excluding automobiles showed no negative portion on trade balance response curve net trade in consumer goods was totally unresponsive to devaluation (cited on Bahmani-Oskooee and A. Ratha, 2004). In familiar approach of sector wise study, Colin A. Carter and Daniel H. Pick (1989) studied the J curve effect on balance of trade of US agricultural sector. The responsiveness agriculture trade balance was found to depict a J curve effect after devaluation impact was analyzed through exchange rate impact on agricultural export and import unit values. This was because of time lag as Carter and Pick (1989) put forward, “…the result of the imm