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Exchange Rate Fluctuations and Trade Flows Evidence From the European Union

This paper analyzes the effects of exchange rate volatility on bilateral trade flows. Through use of a gravity model and panel data from western Europe, exchange rate uncertainty is found to have a negative effect on international trade. The results seem to be robust with respect to the particular m...

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Bibliographic Details
Main Author: Dell'Ariccia, Giovanni
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 1998
Series:IMF Working Papers
Subjects:
Government And The Monetary System
Payment Systems
Balance Of Trade
International Trade Organizations
Monetary Economics
Currency; Foreign Exchange
Regimes
Trade Policy
Trade: Forecasting And Simulation
Trade Balance
Exports And Imports
Plurilateral Trade
International Economics
Money
Foreign Exchange
Standards
International Trade
Currencies
Monetary Systems
Real Exchange Rates
Exchange Rates
Empirical Studies Of Trade
Money And Monetary Policy
Portugal
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper analyzes the effects of exchange rate volatility on bilateral trade flows. Through use of a gravity model and panel data from western Europe, exchange rate uncertainty is found to have a negative effect on international trade. The results seem to be robust with respect to the particular measures representing exchange rate uncertainty. Particular attention is reserved for problems of simultaneous causality. The negative correlation between trade and bilateral volatility remains significant after controlling for the simultaneity bias. However, a Hausman test rejects the hypothesis of the absence of simultaneous causality
Physical Description:27 pages
ISBN:9781451852950

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