Exchange Rate Fluctuations and Trade Flows - Evidence from the European Union
AbstractThis 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, stemming from the endogenous behavior of monetary authorities. The negative correlation between trade and bilateral volatility remains significant after controlling for the simultaneity bias. Copyright 1999, International Monetary Fund
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 98/107.
Date of creation: 01 Aug 1998
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Other versions of this item:
- Giovanni Dell'Ariccia, 1999. "Exchange Rate Fluctuations and Trade Flows: Evidence from the European Union," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 5.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
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