Exchange Rate Regimes And Trade
AbstractA 'new version' of the gravity model is used to estimate the effect of a full range of de facto exchange rate regimes on bilateral trade. The results indicate that, while participation in a common currency union is typically strongly 'pro-trade', other exchange rate regimes which lower the exchange rate uncertainty and transactions costs associated with international trade are significantly more pro-trade than the default regime of a 'double float'. They suggest that the direct and indirect trade-creating effects of these regimes on uncertainty and transactions costs tend to outweigh the trade-diverting substitution effects. Tariff-equivalent monetary barriers associated with each exchange rate regime are also calculated. Copyright � 2007 The Authors; Journal compilation � 2007 Blackwell Publishing Ltd and The University of Manchester.
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Bibliographic InfoArticle provided by University of Manchester in its journal Manchester School.
Volume (Year): 75 (2007)
Issue (Month): s1 (09)
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Other versions of this item:
- Christopher Adam & David Cobham, 2007. "Exchange rate regimes and trade," Money Macro and Finance (MMF) Research Group Conference 2006 9, Money Macro and Finance Research Group.
- Christopher Adam & David Cobham, 2005. "Exchange Rate Regimes and Trade," CERT Discussion Papers 0505, Centre for Economic Reform and Transformation, Heriot Watt University.
- F10 - International Economics - - Trade - - - General
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other
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