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Exchange rate volatility in Latin American and the Caribbean region: Evidence from 1985 to 2005

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  • Radhames Lizardo

Abstract

Using a total of 28 Latin American and Caribbean countries, this study finds a negative relationship between trade and exchange rate volatility. The econometric tool for this specific analysis is the widely used gravity model, in a panel data context. A similar condition is detected between inbound foreign direct investment and exchange rate volatility. The results of the study support the hypothesis that significant exchange rate volatility has a negative impact on the economies of the region and that achieving exchange rate stability should be a goal of policy makers in the context of Latin America and the Caribbean.

Suggested Citation

  • Radhames Lizardo, 2009. "Exchange rate volatility in Latin American and the Caribbean region: Evidence from 1985 to 2005," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(2), pages 255-273.
  • Handle: RePEc:taf:jitecd:v:18:y:2009:i:2:p:255-273
    DOI: 10.1080/09638190902916501
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    Cited by:

    1. Mekbib Gebretsadik Haile & Geoff Pugh, 2013. "Does exchange rate volatility discourage international trade? A meta-regression analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(3), pages 321-350, April.

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