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The Exchange Rate Regime and International Trade

Author

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  • Romulus-Catalin Damaceanu

    (‘Petre Andrei’ University of Iasi, Romania)

Abstract

The study of the relation between the exchange rates regime and international trade is done using an inter-disciplinary vision that contains knowledge from four different disciplines: economics, history, mathematics and computer sciences. In the case of pure theory of international trade, there is made an abstraction of the fact that international trade is done using money. The theoretical analysis of international trade including the monetary factor deals with static equilibrium and linear models. We conceived a macroeconomic model of the world economy and used this model to make three simulation experiments. The conclusion of these experiments is that a broader exchange rate band has a negative impact over the volume of world trade. This conclusion is confirmed by the historical analysis.

Suggested Citation

  • Romulus-Catalin Damaceanu, 2007. "The Exchange Rate Regime and International Trade," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 5(4), pages 355-369.
  • Handle: RePEc:mgt:youmgt:v:5:y:2007:i:4:p:355-369
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    References listed on IDEAS

    as
    1. Robert A. Mundell, 1962. "The Appropriate Use of Monetary and Fiscal Policy for Internal and External Stability," IMF Staff Papers, Palgrave Macmillan, vol. 9(1), pages 70-79, March.
    2. Bergstrand, Jeffrey H, 1989. "The Generalized Gravity Equation, Monopolistic Competition, and the Factor-Proportions Theory in International Trade," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 143-153, February.
    3. Marco Valente, 1998. "Laboratory for Simulation Development," DRUID Working Papers 98-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    historical analysis; macroeconomic modelling; simulation of international trade; design of exchange rate regime experiments;

    JEL classification:

    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • C99 - Mathematical and Quantitative Methods - - Design of Experiments - - - Other

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