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Exchange Rates and Trade; A Disconnect?

Listed author(s):
  • Daniel Leigh
  • Weicheng Lian
  • Marcos Poplawski-Ribeiro
  • Rachel Szymanski
  • Viktor Tsyrennikov
  • Hong Yang

We examine the stability and strength of the relationship between exchange rates and trade over time using three alternative approaches, mitigating the endogeneity of the relation. We find that both exchange rate pass-through and the price elasticity of trade volumes are largely stable over time. Economic slack and financial conditions affect the relationship, but there is limited evidence that participation in global value chains has significantly changed the exchange rate–trade relationship over time.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 17/58.

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Length: 52
Date of creation: 15 Mar 2017
Handle: RePEc:imf:imfwpa:17/58
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