Purpose – To avoid aggregation bias by using trade data at bilateral level so that we can determine how sensitive are Britain's inpayments and outpayments to the value of the British pound. Design/methodology/approach – The method is based on the bounds testing approach to cointegration and error-correction modeling. Findings – The main finding is that while UK inpayments are not sensitive to the exchange rate, her outpayments are. Research limitations/implications – Future research must concentrate on disaggregating data further, perhaps at commodity level. Practical implications – The results could be used to identify Britain's trading partners against which Britain can devalue the pound and improve her trade balance. Originality/value – No study has attempted to test the impact of real depreciation of the pound on Britain's payments and receipts with her major trading partners.
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Volume (Year): 32 (2005) Issue (Month): 5 (October) Pages: 455-467 Download reference. The following formats are available: HTML
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