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Currency Wars? Unconventional Monetary Policy Does Not Stimulate Exports

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  • Rose, Andrew

Abstract

I investigate whether countries that use unconventional monetary policy (UMP) experience export booms. I use a popular gravity model of trade which requires neither the exogeneity of UMP, nor instrumental variables for UMP. In practice, countries that engage in UMP experience a drop in exports vis-Ã -vis countries that are not engaged in such policies, holding other things constant. Quantitative easing is associated with exports that are about 10% lower to countries not engaged in UMP; this amount is significantly different from zero and similar to the effect of negative nominal interest rates. Thus there is no evidence that countries have gained export markets through unconventional monetary policy; any currency wars launched have been lost.

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  • Rose, Andrew, 2017. "Currency Wars? Unconventional Monetary Policy Does Not Stimulate Exports," CEPR Discussion Papers 11748, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11748
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    1. Andrew Haldane & Matt Roberts-Sklar & Tomasz Wieladek & Chris Young, 2016. "QE: The Story so far," Bank of England working papers 624, Bank of England.
    2. Arteta,Carlos & Kose,Ayhan & Stocker,Marc & Taskin,Temel, 2016. "Negative interest rate policies : sources and implications," Policy Research Working Paper Series 7791, The World Bank.
    3. Andrew Haldane & Matt Roberts-Sklar & Tomasz Wieladek & Chris Young, 2016. "QE: The Story so far," Bank of England working papers 624, Bank of England.
    4. Gopinath, G. & Helpman, . & Rogoff, K. (ed.), 2014. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 4, number 4.
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    Cited by:

    1. Salvador Gil‐Pareja & Rafael Llorca‐Vivero & Jordi Paniagua, 2020. "Trade law and trade flows," The World Economy, Wiley Blackwell, vol. 43(3), pages 681-704, March.
    2. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? On the Trade Relocation Effects from Civil Conflict," VfS Annual Conference 2022 (Basel): Big Data in Economics 264095, Verein für Socialpolitik / German Economic Association.
    3. Mitchener, Kris James & Wandschneider, Kirsten, 2024. "Currency Wars and Trade," CAGE Online Working Paper Series 740, Competitive Advantage in the Global Economy (CAGE).
    4. Korn, Tobias & Stemmler, Henry, 2025. "The persistence of trade relocation from civil conflict," Journal of Development Economics, Elsevier, vol. 172(C).
    5. Kris James Mitchener & Kirsten Wandschneider, 2024. "Currency Wars and Trade," CESifo Working Paper Series 11589, CESifo.
    6. Kathryn M. E. Dominguez, 2020. "Revisiting Exchange Rate Rules," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 68(3), pages 693-719, September.
    7. Kathryn M. E. Dominguez, 0. "Revisiting Exchange Rate Rules," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 0, pages 1-27.
    8. Ana Cuadros & Antonio Navas & Jordi Paniagua, 2022. "Moving ideas across borders: Foreign inventors, patents and FDI," The World Economy, Wiley Blackwell, vol. 45(12), pages 3652-3678, December.
    9. David KRIZEK & Josef BRCAK, 2021. "Support for export as a non-standard Central Bank policy: foreign exchange interventions in the case of the Czech Republic," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 12, pages 191-218, June.
    10. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? Estimating the Trade Relocation Effects from Civil Conflict," Hannover Economic Papers (HEP) dp-698, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    11. Cuadros, Ana & Martín-Montaner, Joan & Paniagua, Jordi, 2019. "Migration and FDI: The role of job skills," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 318-332.

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    More about this item

    Keywords

    Quantitative; Easing; Negative; Nominal; Interest; Trade; Gravity; Bilateral; Data; Empirical;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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